October 21, 2021

NFT Basics: What You Need To Know About Getting Started

One must wonder what a relatively obscure digital artist such as Beeple has in common with Twitter founder and CEO Jack Dorsey’s recent $2.9 million worth tweet? 

The answer to this is a simple three-letter abbreviated term NFT

In a recent Christie’s auction, Mike Winkelmann, aka Beeple, sold his digital artwork for a whopping $69 million. At the same time, Jack Dorsey converted his first-ever tweet on the platform into an NFT. He auctioned his digital legacy off as a part of being a revolutionizing figure in the cryptocurrency niche. 

In a world that will ubiquitously rely on digital assets, creating a marketplace for their trade also requires a digital front. As a result, Non-Fungible Token marketplaces have been emerging on several blockchain platforms ruling out the “intermediaries” part.

What does a Non-Fungible Token mean? 

The world launched cryptographic tokens as a method to replicate money. You could exchange your Ethereum coin with a friend’s, and their value would remain the same. It is precisely similar to how you go on undertaking purchases with a dollar bill. You offer a $2 bill in exchange for groceries worth the money, making fiat currencies fungible. 

However, a non-fungible token, although based on similar technology, is non-tradeable. You cannot exchange an NFT for another because each NFT reflects a unique value and cannot be traded on a like-for-like basis. As a result, NFTs are ideal for representing the intrinsic value behind digital assets. Apart from this, an NFT cannot be divided, modified, or split. You cannot purchase half a painting or one-fourth of digital artwork. 

It, however, does not mean that you cannot put your non-fungible token on sale. You may swap the NFT for a price you deem worthy, but it is usually traded in crypto coins accepted on the blockchain platform. 

What is the purpose of an NFT? 

The objective of an NFT can be summed up in a nutshell. For every digital artwork, whether a trading card, rare in-game items, or censorship-resistant domain names, the blockchain technology will allow the buyer to create a digital tag to assign it a unique identifier. As a result, you may copy it with a simple ‘ctrl + c,’ but the authenticity of the item will be compromised. 

No fools are sitting in the world, buying digital artworks worth millions if it did not involve expert verified authenticity certificates. Nonetheless, how on earth will you ascertain the provenance of an NFT? It is precisely what NFT marketplaces propagate. If you ever stumbled upon the studio master of your favorite Beetles album, how would you know it is the real deal? 

You can simply verify it with the blockchain platform you are trading on by analyzing the ownership history of the piece. Since NFTs are exclusively transferred and traded through dedicated blockchain channels, ownership is provable and guaranteed. Consider your blockchain platform as an accounts ledger. However, instead of it existing physically, the technology embeds it within its system for eternity. 

Where can you buy and sell NFTs? 

Now that you have understood the concept and technology behind an NFT, setting up a digital wallet to commence trading only makes sense. Since all NFT marketplaces use cryptocurrency for buying, selling, or creating an NFT, as a beginner, we recommend you to stick to Coinbase, using Ethereum as your digital currency. 

You might want to read: How to Make Money Minting and Selling NFTs

You might ask why only Ethereum? A simple logic behind this is that most NFT marketplaces exist on the Ethereum blockchain and require an individual to possess a prior ETH holding to indulge in trade. 

However, you may dive right into the deep end with Metamask if you’d like to check out some of the more obscure NFT marketplaces. 

Oren Todoros

Founder of NiftyX NFT industry news, BIGINTRO a content strategy agency servicing emerging industries, and the proud father of 3 beautiful girls.

View all posts by Oren Todoros →

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