NFTs (non fungible tokens) are the newest buzzword. They’re everywhere, and everyone who is someone is getting involved. Snoop Dogg, Paris Hilton, Tom Brady. The most important questions about them: what are they and how can I make money off of them? The answer is simpler than you think.
NFT stands for non-fungible tokens, which are unique digital assets. They are non-fungible, meaning they are not interchangeable. They all have unique qualities, so no two are alike. They are like diamonds, where each gem has a different cut, grade, and size. This is in contrast with fungible assets like money; if you have a hundred $1 bills, you can trade those for one $100 bill because they have the same value.
Additionally, the value of NFTs are speculative. They are worth what people are willing to pay for them. They can either be auctioned off or sold at a flat rate. There is also an option to set royalties, so the owner is compensated every time the NFT resells. The market for NFTs has exploded, with some selling for tens of millions of dollars.
NFTs are units of data stored on a blockchain. When you buy an NFT, the blockchain certifies that you are the owner, that the asset is unique, and that the technology can trace it back to its original issuer. The digital asset could be a video, music, art, virtual items on a video game – essentially anything digital, though they are most popularly used now to sell digital art and virtual collectibles.
This is what makes them so great! They are created like any other media file. Anyone can make them! Anyone can buy them! It doesn’t take any specialized knowledge. The first step in buying an NFT is adding money to a digital wallet to spend from. Many wallets use cryptocurrency like Bitcoin or Ethereum, but there are some that allow you to connect a debit or credit card. Having a wallet opened and funded is required before purchasing or bidding on NFTs in any marketplace.
The next step in buying or selling NFTs is finding a marketplace, and there is no shortage of marketplaces from which to choose. Some marketplaces are specialized for things like sports moments or concert tickets. For selling your NFT, you need to upload your asset to a marketplace. The marketplace would need to support the blockchain on which your NFT was built. This can be accomplished by “minting” your NFT, which simply means publishing it on that specific blockchain. Connecting it to the blockchain is necessary for the marketplace to verify that the asset is unique and belongs to you. Once it is sold, the marketplace handles everything else; they transfer the funds to the seller and the asset to the buyer.
This post is authored by Kennedy Williams. Kennedy is currently in her first year of law school at the University of Virginia. She attended Tulane University of New Orleans, where she received her B.S. in Psychology in 2020. She is the recent winner of the Technoeconomics® Scholarship Award for excellence in legal research.
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