When it comes to the world of crypto and all the phrases that are tossed around in it, the one that you have probably wondered the most about is the NFT one, as it is certainly the most used one apart from words like blockchain, crypto wallet, seed phrase, moons, and a few other ones.
You might have tried to Google the meaning and explanation for it, and you have either landed here on your first try looking for a simple explanation that will not take your half-an-hour to read, or you have spent a while on Google finding useless explanations that inevitably wasted your time. Without further ado, let’s get word NFT explained without too much confusion.
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What is an NFT?
Non-fungible tokens or NFTs are unique cryptographic assets that are printed on a specific blockchain that they are related to. You have probably read this NFT meaning a couple of times already, but what does that mean? It basically states that they are like a signature of ownership of the thing that they represent.
The best example of looking at an NFT is to look at it like cards since they are non-fungible.
Wait, what is a fungible token to begin with?
A fungible token is something those values are interchangeable. If you would trade fungible tokens, you would know how much each is worth. It is like converting US Dollars into Euros, for example, the value of both is known.
With non-fungible items, the value cannot be really compared to anything else, as it is one of a kind, and its value can be determined by all kinds of factors. A non-fungible item could technically be that monstrosity of plasticine that you stuck together when you were a child. To some, it could be worthless, but it could be worth a lot to you due to sentimental value.
Of course, when the word is about modern NFTs in the crypto universe, at the moment, the talk is not really about physical items, even if old historic items are probably the best and most common representation of an NFT. In the digital world, an NFT can represent anything, from music to images, gifs, videos…literally anything.
How are NFTs created?
NFTs are created by artists or license-holders through a process which is known as minting. This process involves signing a blockchain transaction that outlines the details of the token, and then it gets put on the blockchain to trigger a smart contract function that can prove its owner.
A smart contract is basically code that is executed deterministically on the blockchain network. They can store a small amount of data in common data structures, which is the critical component of identifying the owner of an NFT.
The first media that popularized NFTs is the game called Crypto Kitties, which is a game where people could collect and trade virtual kittens that were generated as NFTs on the Ethereum blockchain, and it was done all the way back in 2017. It is a surprise that it took a bit for NFTs to become as popular as they are today.
What is the point of NFTs?
The answer to this question is a bit tricky since it depends if you are asking it from the perspective of an artist, or a perspective of a collector. If you are asking as the ladder, the best way to look at buying and NFT is to consider it as having the bragging rights to owning the NFT, supporting the artist you are buying it from, and of course, being able to use the image online without any issues.
As a seller, NFTs are a great way for you to sell your work that might not actually have a market. You can sell stickers, digital art, or perhaps even some sound effects as an NFT. If you are a seller, the feature of getting a percentage each time a transaction with your NFT is done can be quite useful if your work becomes popular, just some friendly advice.
So..are NFTs technically useless?
Again, it is a bit tricky to explain, because it really depends on the type of NFT. It depends on what are NFs and how does NFTs work. For example, if someone posts a picture of themselves on the NFT marketplace and wants to sell it for $1000, it does not seem too tempting, but if the NFT is something that you can use in a game for esports crypto events, then it might be worth your time.
What are NFTs and how do they work in NFT Games
The best example for NFTs that actually have some kind of utility behind them are ones that are used in games. Do not get us wrong, owning some rare NFTs that people would pay big bucks for in order to get them in your crypto wallet as original owners are probably worth having or owning, but the ones with practical use are the ones always worth checking out.
Axie Infinity is one of the most popular NFT games out there. It is also a play-to-earn game, which increases the reason behind its popularity. You can learn more about P2E NFT games or the P2E meaning in our hyperlinked texts if you are not sure what this is.
In this game, each Axie (monster in the game that a player can have on their account) is an NFT. These NFTs are used to create a team and fight other players on a ranked competitive ladder. So how NFT work in this game is that every monster has its own stats and effects, which is what makes the game interesting, as each team is more or less unique (as certain NFTs do have very slight differences).
Can you store an NFT on every wallet?
The most common mistake when it comes to NFTs is that a lot of people consider them just a bunch of cryptocurrencies bundled together, which would naturally make it viable on all crypto wallets. However, it is a bit more complicated than that, which is why you should look if your wallet supports the storage of NFTs in their NFT form. In some cases, you might lose the NFT forever if you attempt to transfer it to a wallet that does not support it.
- Funko NFT
- Street Fighter NFT
- Pokemon NFT
Read more: Nft explained – Krypto-NFTs