What is Non Fungible Token
NFT is a type of digital asset. Anything can be converted into digital form through NFT. For example, Photos, Videos, Music, Drawings, Tweets, etc. can all be converted to NFTs. NFT is a digital token.
These digital tokens are bought and sold through cryptocurrencies only. Each token has a unique ID code. These digital tokens also cannot be copied. It is unique in itself. Most NFTs are created on Ethereum.
Blockchain technology is used in NFT. Registering ownership of a digital token on the blockchain is called NFT. It is heard that Tesla Founder Elon Musk also wants to bring his own NFT.
And they have also made preparations to bring NFTs. Along with this, musician Grimes has also sold some of his arts for $5 million. If understood in simple language, NFT is a digital asset.
For example, let’s say you have a song like this. Which is unique, which no one else has. That is, no one can replace that song in the world. So it will be called non fungible, that is, its value increases.
So you can sell it online by making it NFT. And whoever buys it, he will get it in the form of an online token. If we take another example. Let’s say, if you have 50 US dollars.
So you can exchange it with any other. But this process will be called fungible. If you make the same dollar unique. If you make that dollar unique through signature etc., it becomes non fungible.
How Does NFT Work
NFTs are based on the blockchain. NFT works only through blockchain technology. NFT Specially makes more use of a particular Ethereum technology.
Blockchain technology is like a public ledger, which keeps a record of transactions. That is, whatever entry is made in blockchain technology, it cannot be removed. It is considered a very safe technology.
When a person buys arts, photos, videos etc. So its entry is done in the ledger. Or whenever he sells arts, videos, photos, etc., his entry will be made there in the ledger.
This cannot be removed. It is non-erasable. Here the record of all the entries is kept. And along with this, who is the owner of the videos, photos, arts etc., it also gets to know.
If suppose a song of a famous singer has been released. And that same song and that song you bought through NFT. He has only one copy. Now when you sell that song in future, it will sell for a higher price. Similarly, you can invest your money in NFTs.
Are NFTs Safe
Non fungible tokens are based on blockchain technology. These are considered quite secure. Blockchain technology works on the distribution network. So hacking them is very difficult.
Advantages
NFTs work like passive income in a way. For example, suppose you have made a photo. If you sell it in one go, you will get money only once. But through NFT you can select 10% royalty in it.
Whenever your photo is further sold, you will get 10% amount. Which will become your passive income in a way. Also the biggest advantage of NFT is that, it is based on Ethereum Blockchain Technology.
It records everything in the ledger using the Ethereum blockchain technology. Due to which the safety increases a lot. Along with this, there is no risk of copying your arts, photos, videos etc. Because through NFT it is known who is its real owner. NFT solves this problem as well.
Disadvantages
Its biggest disadvantage is that, you have to rely on third parties to sell arts, videos, photos etc. That is, you cannot sell your digital assets without the help of Ethereum blockchain technology and the Internet.
You will have to rely on the Ethereum blockchain technology and the Internet. On the NFT platform, people are stealing other’s Arts, Videos, Photos, Paintings etc and selling them as their own.
Along with this, one other big problem of this is that, you can make payment in it only through cryptocurrency. As we all know, there is no one to regulate cryptocurrency. Cryptocurrency is not regulated by the government, that is, there is always doubt about the stability of cryptocurrency.
Why is NFT Necessary?
Through NFT, the singer or artist gets the right price for his music and painting. He has the right to a person’s property. It is based on blockchain technology, so that person can hold or exchange it.
And when his music or art gets the right price, then he can sell it. And even after selling further, he gets the right price. Due to E-commerce, buying and selling has become much easier.
Earlier one had to physically go to the market to sell arts, paintings, music, videos and photos. But now they can be sold online through NFT. You can easily buy and sell digital assets by making them NFTs.
Non-Fungible tokens are like cryptocurrencies. Its biggest advantage is that, NFTs remove the intermediates. Because through blockchain technology the middle agents are eliminated.
So that the business process becomes very easy. And NFTs have a unique identification. Non fungible tokens are also best in identity management.
How to Buy NFTs
Many NFTs can be bought through ether. First you need to open an exchange account and Crypto Wallet. There are also two types of crypto wallet, first hot wallet, second cold wallet.
After that you have to buy Ethereum. Because most NFTs are built on the Ethereum Blockchain. After that you have to transfer to Ethereum Crypto Wallet. You will then need to connect your Crypto Wallet with the NFT Marketplace. And then you can buy NFTs.