What is an NFT?

What is an NFT?

NFTs are everywhere these days, exploding in popularity in large part from the heavy influence of the internet. Many people recognize the potential for making money using NFTs as a modern form of investing. NFT ownership also offers the chance to expand your personal collection, appealing to art lovers and the creative community at large.

These digital assets have attracted the attention of public figures, celebrities, and influencers, but anyone can participate and start their NFT collection. One of the most common questions asked when first starting out is will NFTs stick around? Are they here to stay or a passing fad? Current momentum of NFTs and the digital asset community points to them being here for the long haul.

In this guide, we’re answering the question, “What is an NFT?” along with how NFTs work. Read on for a better understanding of these unique digital assets and why they’ve become so popular then dive in to start your collection.

What is an NFT and what does it stand for?

The first question people have when they hear about NFTs is, “what is an NFT?” This is often followed by, “what does NFT mean?” NFT stands for non-fungible token and is a unique digital asset managed using blockchain technology. Blockchain is a decentralized system of peer-to-peer (P2P) networks that records transactions in a ledger for digital assets like NFTs or cryptocurrencies.

While the term NFT may be new to you, it’s actually been around since 2014. As the technology has continued to grow in popularity, anyone with NFT knowledge is able to mint their own and sell them on NFT marketplaces . Some NFTs are completely digital while others are partly made up of physical assets, too. These come in the form of physical artwork, collectible trading cards, and more.

The scope of NFTs is expansive, which is why some find them confusing at first. How can a digital cartoon monkey and a virtual sneaker both be classed as an NFT? The answer is that they’re unique. While NFTs may be replicated, copied, or downloaded, there’s only one original. Owning an NFT marks you in the ledger as the sole owner of the original digital asset. The creator is the first owner, but this can be transferred to another and recorded in the blockchain ledger.

Should you invest in NFTs, then? This is a similar question to any form of investment, physical or digital. Each possesses their own risks and rewards, but NFTs represent a new form of investment for collectors, investors, and enthusiasts alike.

How non-fungible tokens work

NFTs exist on a blockchain network. This technology–or system, as it's referred to–stores a record of transactions related to the token itself on a digital ledger. This means each buyer will know where the NFT has come from, who created it, and who has owned it along the way.

Cryptocurrency investors will be aware of how blockchain works. NFTs are most often held on the Ethereum network, which also has its own cryptocurrency. There are other blockchains that support NFTs, however, with technology expanding as they continue to explode in popularity.

NFTs are digital tokens that represent ownership over tangible or intangible items (depending on the asset in question). They include digital artwork, video and sports moments, collectibles, music, and more. Think of NFTs as digital versions of physical collectible items. This characteristic of NFTs is why they’re called non-fungible tokens.

What is fungible and non-fungible?

If NFTs are non-fungible tokens, are there fungible tokens? What’s the difference? While NFTs use blockchain technology similar to cryptocurrencies, they're not the same.

Physical money and cryptocurrencies are fungible tokens. Fungible tokens are divisible and non-unique. For example, 1 bitcoin is worth 1 bitcoin regardless of where it is issued. This also means fungible tokens are able to be exchanged for a particular value.

Conversely, non-fungible tokens (NFTs) are unique and/or limited in supply and non-divisible. NFTs represent one unique and indivisible item whether physical or digital. NFTs are non-fungible because they can't be exchanged for or equal to another token. Each has its own unique digital signature.

Examples Of NFTs

The easiest way to get a better understanding of what NFTs are is to look at popular examples on the NFT marketplace. From digital artwork to digital assets that make up entire NFT collections, NFTs come in all different forms. This diversity is what makes them so exciting for collectors, investors, and enthusiasts.

Some of the most popular examples of NFTs include:

  • Bored Ape Yacht Club
  • Tin Soldier - Extraterrestrial Green & Cosmic Black
  • Women's Day
  • Death Banana
  • Growl for Love
  • Evirob Galaxy by Devilrobots

Bored Ape Yacht Club

The Bored Ape Yacht Club, popularly known as BAYC, is a collection of 1,000 Bored Ape NFTs living on the Ethereum blockchain. Yep, that's right–digital cartoon monkeys.

As well as being unique digital collectibles, BAYC NFTs double as a membership card to the Yacht Club, providing special members-only benefits. Each Bored Ape is unique and programmatically generated using a possible 170+ traits. These traits provide variations on expression, clothing, headwear, and more.

Tin Soldier

Tin Soldier is another popular NFT. The Extraterrestrial Green & Cosmic Black makes up some of the many works created by the Interference brand.

The inspiration behind the Tin Soldier series is a look at how AI technology is rapidly developing within the world. The half-human, half-skeleton sculpture is classed as a digital asset in the toys sector of NFTs available on UCOLLEX.

Boss Beauties

As part of International Women's Day, the United Nations displayed a 1-1 Boss Beauties collection as the UN's first every NFT display. The digital art displayed was from woman-focused brand Boss Beauties. Each non-fungible token features a different type of woman and is available as a digital file for anyone interested in purchasing one.

Boss Beauties dedicated the event to young girls who were told ' no ' yet responded with ' just watch me .' It's a meaningful message that makes up one of many powerful NFT projects in existence.

Death Banana

Death Banana is an example of how unique and interesting some NFT marketplaces are. Digital artists can be anyone, from celebrities to your neighbor! The Death Banana is a series of non-fungible tokens that loves heavy metal and despises sports. It makes a truly unique splash in the wacky world of NFT creations and artwork.

Growl for Love

Growl for Love is a special Valentine's Day Mystery Box campaign that was created to celebrate love and compassion. As a non-fungible token, this collection was created by comic artist Pat Lee, who has worked on both Marvel and DC comics!

Notable creators like this make their NFTs more valuable. For buyers, it's an opportunity to own something from a celebrity. In NFT marketplaces, you never know what (or who) you could come across.

Evirob Galaxy by Devilrobots

Evirob Galaxy by Devilrobots is a collection of powerful beings that exist beyond the Evirob Galaxy. There are 11 editions of the Evirob, making them a highly-sought and rare NFT collection. Some NFT marketplaces will sell “limited edition” assets like these, increasing their value and adding to their popularity.

What are NFTs used for?

The digital economy is certainly an interesting one. As more NFT collections arise, they’re continuing to build a bigger presence in the digital marketplace and growing in popularity. Many celebrities and public figures have created their own tokens, adding to the intrigue and interest of these digital assets.

For artists and content creators, NFTs and blockchain technology helps uniquely monetize their assets, giving them full ownership over the tokens they create. As technology expands, NFT artists can even program in royalties to the assets. This means when that NFT is sold from one person to the next, the creator receives a percentage of those sales.

As a collector, additional benefits beyond the financial aspects of owning NFTs may be a draw. Some NFTs come with physical perks or attached assets, as well. For example, if a fan of a music artist buys their NFTs, that NFT might include a physical ticket to their next show or exclusive merchandise no one else has access to.

For passionate collectors, NFTs can be an opportunity to have something unique that's related to a hobby they have or fandom they follow. There are lots of different types of NFTs, as well, which can be very exciting to those that collect them.

The more perks that an NFT provides, the more valuable or sought after it often becomes. At the same time, there's no guarantee that any NFT will sell once it's registered and put on to the market.

How to get started with NFTs

Learning how to get started with NFTs is crucial to your success whether you’re looking at buying NFTs or minting your own. There are many popular NFT marketplaces to consider, but first you need to get yourself set up!

The first thing you need in order to buy or sell NFTs is a digital wallet. Similar to a physical wallet, this will keep all your cryptocurrencies in one place. You can have more than one digital wallet if you prefer, but be sure to keep track of them.

Many NFT marketplaces only allow transactions using cryptocurrency, though marketplaces are emerging that allow credit card transactions as well. For example, our UCOLLEX platform for NFT projects and digital collectibles allows you to buy NFTs with a credit card; no crypto required. Each marketplace should walk you through the process with relative ease until you’re a total pro. If you’re exploring multiple marketplaces, it makes sense to keep crypto handy in your wallet just in case you need it.

There are many popular projects to choose from like the Formu1ape Mystery Box . This is a new project limited to 1,000 pieces and priced at $10 each. Each comes with physical rewards that are set to be revealed at a later date. Other NFT projects worth exploring include Mad Barbarians Mystery Box, and Evirobs.

For NFT creators, there are plenty of different types of NFTs you can create. From music to physical artwork that you digitize and sell, the sky’s the limit. The most important part of your success will be choosing the right platform to sell your NFTs. After all, you want to market your NFTs where people are looking for them!

As an NFT buyer, it's important to have an idea in mind when you’re browsing online. Look at prices and research how an asset's value has risen or fallen over time before committing to purchase. Another factor to consider is the rarity of some tokens over others. Like physical collectibles, there are many personal benefits that can come from investing in NFTs that add to its value, as well.

Now that you’ve learned the answer to, “what is an NFT?” are you ready to dive in? Deciding whether or not to invest in NFTs comes down to you as an individual. Many people have enjoyed collecting, creating, and investing in NFTs making them one of the most popular new forms of investment around.

For those who already invest in digital assets like crypto, it’s not a huge leap. If you’re new to NFTs, they can be a fun way to explore digital assets and currencies at your own pace. You might get lucky and even end up re-selling an NFT for a substantial profit down the line!

Like any investment, it’s important to DYOR (do your own research) and understand how NFTs work before jumping in if you’re looking to make a profit. For hobbyists and casual collectors, browsing digital collectibles and other NFTs could become something you’ll enjoy for the entertainment value, instead. Whatever your reason, enjoy NFTs and all the excitement they bring.

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