What’s an NFT in crypto and why are they distinctive?

What’s an NFT in crypto and why are they distinctive?

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NFT


What people refer to as NFT, or Non-Fungible Token, is a kind of crypto asset that represents something unique, collectible and that cannot be replicated. Thus, NFTs are prestigious for their uniqueness and authenticity.

Certainly, it is possible to download the image associated with the NFT or collectible item, but this does not represent its ownership or authenticity for all intents and purposes. Even NFTs in a limited series are not all the same: you could have piece No. 1 out of 100 and that would make it rarer than the others in the series.

Primarily, NFTs are digital artworks, songs, gifs or videos. In some cases, even video game collectibles can be represented through an NFT and even some financial products related to staking.

However, crypto art and NFTs are not limited to one particular field; rather, they center around imagination when it comes to the creation of NFTs. So, even physical collectibles can be represented through NFTs. In those cases, the private key to access the wallet containing the NFT is usually integrated or provided along with the physical piece.

The most suitable blockchains for NFTs

Before going to discover which are the best blockchains for creating NFTs, it is important to define what a blockchain is. Blockchain literally means a chain of blocks

It is a computer network of nodes that uniquely and securely manages a public ledger composed of a variety of data and information, such as transactions, in an open and distributed manner, without the need for central control. In fact, the blockchain is referred to as a decentralized chain.

Consensus for transactions is distributed across all nodes in the network. Thus, all nodes can participate in the process of validating transactions to be included in the ledger.

Having clarified this, we know that the two most commonly used blockchains to create and distribute NFTs are Ethereum and Binance Smart Chain. As for the wallet, the crypto wallet, most of them support the two blockchains mentioned, so there is hardly any difference in which wallet you decide to use to store your cryptocurrencies.

The most important factor and one to watch out for is the blockchain network on which the token is built. If it is an Ethereum token, for example, you will need a wallet that supports Ethereum. Conversely, if it is a token on Tezos, you will need a wallet that supports Tezos, and so on.

Generally, the wallets that support the widest variety of blockchains are MetaMask and Trust Wallet, so it is advisable to use these two to be on the safe side, especially if you are new to blockchain.

With regard to the platform for creating NFTs, it is a choice that is partly personal and partly related to the blockchain you are going to use. It is important to remember that most protocols on BSC create the NFT as a BEP-721 token, so technically, the NFT is built the same way on whatever platform you choose.

However, NFTs can also be exchanged at a later time. So, if that is the intention, it would be best to choose a platform that has a marketplace with which you are familiar and comfortable. By doing so, the token will not have to be transferred elsewhere after its creation.

Generally, the BakerySwap and Treasureland platforms are the easiest and most intuitive to use for creating NFTs. In fact, these BSC projects have simple interfaces and convenient fees for creating tokens.

Specifically, BakerySwap has the largest market for NFTs, making it a good choice for anyone who wants to sell their NFTs after creating them. Treasureland, on the other hand, allows you to create NFTs for free. In any case, if the intention is to use the Ethereum blockchain, OpenSea or Rarible are two of the most popular and widely used platforms for that type of token.

What is an NFT exchange and how do they work?

An exchange is where NFTs can be traded, transferred or sold between various marketplaces and new buyers. Under one condition, that the new platform supports the type of token created at the start.

For example, for marketplaces and exchanges on BSC, the vast majority support both BEP-721 and BEP-1155 tokens. These are the most common types of NFTs found on BSC.

What you cannot do is transfer the tokens directly to a marketplace on another blockchain. For example, OpenSea does not natively support NFTs from Binance Smart Chain. Although it might be possible to wrap tokens, which means putting them in a digital safe and then redeeming them at any time, it is always best to keep NFTs securely on their original blockchain.

In any case, to transfer the original token to another exchange, simply send the collectible to your wallet. Then simply send it to the storage address on the new platform. The important thing is to always make sure that the NFT token standard is supported by your personal wallet and whatever platform you plan to transfer it to.

Why NFTs have value and are unique

The value of an NFT is defined by market supply and demand. Usually, it is easier to assess the value of a token when it is created as a representation of a physical asset. However, most NFTs exist only on-chain, that is, within the digital world. Each collection of NFTs has a different supply and each NFT may have a different rarity.

In any case, there are also other factors that determine the value of an NFT. For example, limited series NFTs with specific applications tend to be more valuable. Not only that, the founding team, along with the artists and the creation community, can also influence the demand for NFTs.

In other words, the value of an NFT might be related to who created it, its value in play-to-earn games, or simply the community and market sentiment. Many have been the cases of successful NFTs sold for exorbitant amounts of money, but many others have been the projects that have failed.

Beeple’s Everydays, the most expensive NFT sold to date

Everydays: The First 5000 Days, the NFT by American artist and graphic designer Mike Winkelmann, better known as Beeple, sold for $69.3 million in February 2021. The token was purchased by NFT investor Metakovan through an auction sale at Christie’s.

Everydays is a digital artwork, a collage of 5,000 artworks produced by Beeple. The story starts way back as early as 2007, when the designer began uploading a new image to his Instagram feed every day and continued to do so for thirteen years.

His “Everydays” artworks are often set in post-apocalyptic landscapes and usually have some relation to current events or pop culture. This NFT collage can be considered a representation of Beeple’s evolution as a digital artist.


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