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What are NFTs and what are they for?

What are NFTs and what are they for?

Lately we hear often about NFT (Non-fungible token) and investments on them. As famous as they are, many still don’t really understand what it is. What are NFTs and what is their purpose? Let’s find out together in this article.

The Italian translation of Non-fungible token is “Non-replicable token”. An NFT, therefore, is a token that, unlike what can happen to the cryptocurrencies, it is not interchangeable. So let’s talk about something unique and not editable. In other words, a unique and certified digital work. Now that we have a starting idea, let’s try to go into a little detail.

NFT: what makes them so special?

Any digital object can become an NFT (photo, video, audio, text, GIF, etc.). At the time of its creation, the author of the work associates it with a precise sequence of numbers, called a “hash”, which is recorded on blockchain. The latter is nothing more than a shared and immutable digital register where all data transactions are saved. These transactions cannot be altered, modified or eliminated in any way. Practically, the blockchain is a system that guarantees the authenticity of the digital product. Once the hashing process is complete, it is finally possible to sell the NFT on dedicated marketplaces.

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The platforms in which it is possible to buy or sell NFTs are many. At the moment, the best known is NiftyGateway, but OpenSea, MarkersPlace and Rarible are also popular. The thing that unites almost all of them is that, most of the transactions, take place in cryptocurrency. To buy NFTs (or sell them), you need a digital wallet with crypto currency and smart contract as the main utility. Once you have purchased the digital work of interest (called minting), you have the opportunity to claim a right to it. For example, you can access exclusive communities or special events.

As already mentioned at the beginning of the article, NFTs have now become a trend. More and more houses decide to sell their digital works. Like physical art products, NFTs can also be considered investments. It is enough to consider that some digital works have been sold at enormous prices (millions of dollars) to realize how profitable the digital works market can be. Of course, this doesn’t mean that earning through NFT trading is child’s play. As in all things, you have to know how to do it.