Over the past couple of years, NFTs started massively gaining hype and trading volume. You definitely saw on social media pictures of monkeys selling for ridiculous amounts of money without any explanation. You might think that it doesn’t make any sense, but it actually does. Let’s dive more into NFTs and find out what are they about.
What is NFT?
NFT stands for Non-Fungible Token. That could mean nothing to you but think of unique, 1 of 1 trading cards or drawings. It’s something that can’t be replaced, something unique. Same thing with NFTs. Each of them is unique and contains information inside.
All of them are located on the blockchain – Ethereum, Solana, Cardano, etc. They have an owner, trading history and easily tracked on the blockchain similar to common cryptocurrencies like ETH, SOL, BNB, etc.
What is the use case of NFTs?
NFTs can be literally anything. Artwork, music, tickets, etc. Some of them are just artworks, some of them are offering a lot of utility to holders, some of them give access to the locked content, and many other use cases. There is no limit to what NFT can be.
How safe are NFTs?
Non-fungible tokens, which operate on the same blockchain as cryptocurrencies, are typically secure. NFTs are hard to hack due to the distributed nature of blockchains, yet they are not impossible. If the platform hosting the NFT goes out of business, you could lose access to your non-fungible token, which poses a security issue for NFTs. But overall, NFTs are very safe on the technical side, like cryptocurrencies. However, when buying or investing in NFTs, don’t forget to DYOR since there are a lot of scams and fake collections of NFTs. You could just lose money in case of carelessness.
Potential income for new artists
Market efficiency is the NFT’s most evident advantage. A physical item becoming a digital asset streamlines processes and eliminates middlemen. NFTs that represent physical or digital artwork on a blockchain do away with the need for middlemen and enable direct communication between artists and their audiences.
Also, since NFTs are open to everyone and easy to make, they open a lot of possibilities to new artists who want to express themselves. Anyone can create an NFT and try to push it to the audience. There are no boundaries on what you can create. And each secondary sale of NFTs gives a % to an artist even after the main sale. This is just unbelievable for artists.
Even though NFTs might be risky, because their future is uncertain, they still give a lot of new opportunities for everyone: artists, companies, investors, fans, etc. Given the benefits that NFTs bring, they cannot be ignored.