WHAT ARE NFTs?

WHAT IS NFT?

Coming to the full form, NFT stands for Non fungible token. In economics, a fungible asset is referred to something with units that can be rapidly interchangeable, for example - money.  With money, you can swap a Rs 10 note for two Rs 5 notes or coins and it will have the same value. But on the other hand, if something is non fungible, this is impossible. It signifies that it has unique properties so it can not be interchanged with something else. 

It can be a house or an art piece such as the Mona Lisa, which is one of a kind. You can click a picture or purchase a printout but there will only ever be 1 original art piece. 

NFTs can be explained as one of a kind assets in the digital world that can be purchased and sold like any other property, but which have no tangible form of their own. The digital tokens can be thought of as certificates of ownership for physical or virtual assets. 

HOW DO NFTs WORK?

Traditional works of art and design are valuable only because they are one of a kind. But digital files can be endlessly and easily duplicated. With NFTs, artwork can be tokenized to create a certificate of ownership that can be sold or purchased. As with crypto, a record of who owns what is sorted and stores on a shared ledger known as the blockchain.

The record cant be forged because the ledger is maintained by hundreds of computers accessing the globe. NFTs can also inculcate smart contracts that may give the artist a cut of any future sale of the token.

ARE NFTs A CRYPTOCURRENCY?

To be precise, NO. NFTs are a type of asset which can be bought like crypto, but behave differently to crypto like Ethereum or Bitcoin. This is because crypto like Bitcoins are fungible and all the tokens are the equal and same. With NFTs, every token is different and unique. You will often hear of NFT and ethereum mentioned together. Either is a crypto similar to Bitcoin and is the native currency of the Ethereum Blockchain. It is also used for NFT creations and trading and is currently the most renowned blockchain for NFTs especially for CryptoArt. 

HOW IS AN NFT CREATED?

You will need a wallet of crypto to create an NFT. An NFT is created by minting your digital asset on a blockchain. Decryptionary defines minting as the computer process of validating information, creating a new block and recording that information into the blockchain. For instance, if you want to create an NFT of one of your artworks digitally, then you will need to use one of the cryptoart platforms and mint the artwork through their smart contract. It is quite simple to do it once you have linked your crypto wallet to the website. 

HOW TO BUY AND TRADE AN NFT?

How you buy an NFT depends on the kind of NFT you would like to buy and the platform you are using. Most NFTs are purchased with crypto and some with faith currency. You will have to exchange your fiat currency through a platform and then set up a crypto wallet where you can send the money once you have exchanged it. 

Once you have some ETH in the wallet, it is super easy on most platforms to connect the wallet with one click and make a purchase. If you want to sell it or trade it, again it will depend on the platform and whether you can send it to other platforms or keep it on that platform.

NFTs IN INDIA

The concept of NFTs in India is very new as of now. It may take some time to catch the trend here, experts say. However, crypto exchanges in India like NFTically and WazirX have started to sell Non Fungible tokens as well and in less than 2 months, India have seen 3 new players dealing in NFTs. 

There was a sudden boom in NFT craze a couple of months back after Amitabh Bachchan broke all records by coming up with India’s first rare art NFTs including madhushala NFT. iconic Vintage Posters NFT and BigB punks and NFT arts were auctioned for USD 9,66,000 or say Rs. 7.18 Crores, the highest ever in India.