What is NFT?
NFT is also known as ‘Non-Fungible Tokens’ in its expanded form where non-fungible means non-replaceable. A thing that is one of its kind. For an instance, the portrait painting of the Mona Lisa is a unique creation by Italian artist Leonardo Da Vinci.
No matter, how great a painter you are to depict that painting, you will never be able to match the level of the original painting of the Mona Lisa because it is one of a kind and you cannot replace it. Besides, everyone is familiar with tokens. It can be simply a piece of paper, metal, or anything that can be used as an alternative to money (however not everybody has it like money). In a layman’s language, we can buy anything sellable, but it does not do the same with the token. With tokens, one can buy only the things for which tokens are made.
How Do NFTs Work?
Since now you are aware of the terms Non-Fungible and Tokens; let’s discover how NFT works? To buy and sell one-of-a-kind digital pieces around the world, NFT was developed. It is also known as a digital asset or virtual art.
Consider the following for an instance to better understand how NFT works. Suppose, you have digital art and you create NFT of that. You’ll be assigned a digital token to certify that you are the owner of that particular asset (say digital art). Now you may sell this NFT whenever you want. All this buying and selling process is done through Ethereum Blockchain Technology. Just like Bitcoin, Ethereum is also a famous cryptocurrency & NFT can be bought or sold by only using Ethereum. However, Binance (crypto exchange platform) allows you to buy or sell NFT with their cryptocurrencies BNB and BUSD.
Should You Buy Non-Fungible Tokens (NFTs)?
Since the future of Non-Fungible Tokens or NFTs is uncertain, therefore it is risky to buy one as we do not have a lot of history to judge their performance. They are so new, may be worth investing in small amounts to try it out. To summarize, investing in NFTs is a largely personal decision. Besides, it may be worth considering if you have money to spare and NFT holds meaning for you. However, remember, an NFT’s value is based entirely on what someone else is willing to pay for it. There may be a chance that an NFT would resale for less price in comparison to what you paid. All in all, do the research, understand the risks — including what you might lose after investing dollars & decide to take the plunge. So, proceed with a healthy dose of caution!
Hope this blog may have given you some clarity on what NFT is and why is it such a hot topic right now. Let me know in the comments section if I missed out on something.