If you check your social media from time to time, NFTs (Non-fungible tokens) have probably found their way to you. Those who have no interest in crypto will see those funny pictures as useless or ridiculous, but when you engage in NFTs, you see the creative way people have managed to handle cryptos.

In this article, LI.FI is taking you on a journey of the rise of NFTs, their importance, and how they managed to survive in the competitive world of cryptocurrencies.

What Are NFTs?

Primarily, Non-fungible assets (NFTs) are digital assets that consist of real-world items like music, art, videos, etc. Cryptocurrency traders buy and sell them online along with cryptocurrency. Like most cryptos, NFTs run through the same encoded underlying software system.

To simplify it, we can say that NFTs are pieces of media that operate on blockchain technology that we can collect in exchange for crypto. There is a twist, though. Unlike usual cryptocurrencies, you can’t trade NFTs. They are irreplaceable and not interchangeable. So, when you buy one, it is yours.

They come in various forms of media, ranging from pictures and audio to digital real estate.

NFTs are a part of the Ethereum blockchain system. They are structured around specific standards such as ERC-721 or ERC-1155. By integrating NFTs into such systems, they gain classic cryptocurrency characteristics, such as being a part of the strictly defined chain of data with a traceable history. This allows them to be easily transacted across different platforms and apps, such as arbitrum swap, used for faster and cheaper transactions.

The importance of NFTs lies in the fact that one cannot copy the digital asset that you have tokenized on the blockchain. This gives artists and digital creators copyrights and reproduction rights, as it happens with physical artwork. However, like other assets, NFTs are also subject to taxation. 

What Is The Use Of NFTs In The Crypto World?

Although NFTs are part of the Ethereum blockchain, other blockchain systems also have their versions of NFTs. These digital assets have been around since 2014 but have gone on to become popular since 2017. In the last two years, the use of NFTs skyrocketed.

The specialty of NFTs is that they are non-fungible, which means they are unique and cannot be replaced. On the other hand, other cryptocurrencies like Bitcoin, Ethereum, etc., are fungible – meaning, you can trade one Bitcoin for another, and there shall be no change. Here, the value of all NFTs is not equal since each one of them contains different types of assets.

These tokens (NFTs) have unique identification metadata codes, which are protected with the help of the encryption function. Then, these tokens find their place in the blockchain, while the digital assets of the NFTs are stored somewhere else.

One can trade NFTs in exchange for money, other NFTs, and cryptocurrencies. However, the value of a particular NFT depends on the market and the demand for the assets that it contains. For example, you can tokenize a digital asset on a blockchain, and the one in possession of the private key to the token has the rights to the token.

The Significance Of NFTs

One must wonder, are there any benefits to owning an NFT? Well, here is a short list of possible uses for having a few pictures and drawings in your crypto wallet:

1. Attracting a diverse audience: By separating themselves from the usual crypto tokens, NFTs have gained attention from a more artistic audience. This way, the crypto world has gained a whole new public, reaching from artists and musicians to art and architecture enthusiasts.
2. Empowering digital creators: Following up on the previous point, NFT profitability has also given inspiration to those interested in digital art to start creating artistic tokens. With DeFi being strictly peer-to-peer and blockchain-organized, selling NFTs doesn’t require intermediaries and gives artists more control of their art online.
3. Establishing digital ownership: As said before, once you buy an NFT, it’s yours and only yours. This is a great way of gaining a great, unchangeable proof of ownership in the crypto world. With this characteristic, the risk of duplication is erased.
4. Versatility and innovation: The use of NFTs reaches beyond just being a pretty piece of art. They are beginning to transform the gaming industry by allowing players to own in-game assets. Furthermore, NFTs are finding their way into sectors like virtual real estate, representing ownership of digital land.
5. A foundation for new markets: A boom in NFT popularity has created a whole new ecosystem in the crypto world. This has also created a solid ground for new businesses and markets to rise, giving DeFi yet another innovative aspect.

Read Also: What Does NFT Stand For? – RWB

Placement Of NFTs: Popular Marketplaces

If you are interested in buying NFTs, you will first need to get a digital wallet. This will allow you to store NFTs and cryptocurrencies. Furthermore, in some cases, you might need to purchase some cryptocurrencies as well, depending on what crypto your NFT provider accepts. Here, you can buy a crypto with an online payment or by using a credit card.

Once you have funded your crypto wallet, you can shop for NFTs. The following are some of the biggest marketplaces where you can buy NFTs:

OpenSea.io

You can find many digital items on this platform. All you need to do here is create an account. It has good filter options with the help of which you can find new artists.

Foundation

This platform is unique in the way that a new artist must receive invitations or upvotes to post their art on the platform. There is a point system named “gas“ which artists need to buy. This helps artists to promote better artwork.

Variable

This platform is also an open marketplace where artists and creators can sell digital artwork through NFTs. Artists can buy RARI tokens, which can help them make inputs on community rules and fees.

Conclusion

Although NFT’s current situation isn’t promising, and fewer and fewer people are choosing to put their ownership in this form, we can all agree that this sole concept is truly interesting. People have managed to give value to digital art and make it resemble traditional cryptocurrencies. With NFTs, there are no more risks of duplication and fraud, but one must also have great knowledge of the functionality of crypto to be able to truly have benefits from owning NFTs. We hope to see the regrowth of the power of NFT, just to see in which other ways their fun tokens can evolve!

Additionals:

• Amazing Benefits Of Using Cryptocurrency
• What Is The Most Expensive NFT Sold Till Date In 2022?
• Are NFT and Metaverses the key to unlocking economic integration and digitization?