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What is an NFT and how to invest in digital tokens from scratch

There has been a lot of talk lately about Non-Fungible Tokens, especially since they are valued at billions of dollars right now, but do you really know what a NFT?

In theory, a non-expendable asset has unique characteristics, and therefore cannot be exchanged for any other resource of equal value, which makes it highly attractive.

Knowing in depth about digital tokens is key to understanding the future, and to taking advantage of all the investment opportunities and financial prosperity that they offer you.

Expendable and non-expendable property:

If you wonder what an N isFT you have come to the right place. In this article we will explain how it is defined, what its characteristics are and how you can invest money on these assets with success.

The starting point is to thoroughly understand the concept of expendable or non-expendable property.

The first of these refers to goods that can be exchanged, and whose value varies depending on their weight, number or measure.

A classic and simple example of a fungible good is money. If you have a $10 dollar bill, you could exchange it for another $10 bill (or 2 $5 bills), since it is the same, and also, it does not lose its value.

While non-expendable goods cannot be substituted or exchanged under any precept or circumstance. They are simply unique and exclusive.

A work of art is a non-expendable good. This means that it cannot be exchanged for another because its values ​​are not equitable or equivalent.

So understanding the difference between the two goods is crucial to familiarize yourself with the topic of Non-Fungible Tokens simply and accurately.

What is an NFT?

The Non-Fungible Token (NFT), whose literal translation is Non-Fungible Token, they are defined as digital units of value that are completely unique in the world. This means that an NFT cannot be changed or exchanged for another asset of equal value, because there is simply no other like it.

Comparing a non-fungible token to a piece of art is one of the easiest ways to understand what an NFT is.

Take the example of the famous painting by Leonardo da Vinciknown worldwide as “The Mona Lisa”.

There is only one on the entire planet, the only and original, and it is in the Louvre Museum in Paris. So, if someone wanted to have it, they should buy it (assuming it was for sale).

And although you may be thinking that you could acquire a replica without problems, you must be clear that there is only one original work, and that is precisely what gives it so much value.

The same is true for NFTs. They are irreplaceable and unique digital assets that, although they can be copied or replicated, do not replace their original versions.

This means that the person who owns the NFT actually owns the original. And this is easily verifiable through its respective certificate of authenticity and the rights of acquisition that it carries.

According to BBCNFTs are “inimitable assets” in the digital environment, which can be bought or sold like any other property, except that they do not have a tangible form.

Main characteristics of NFTs

main characteristics of nftIt really isn’t enough to know what it is a NFT, so it is also important that you know some of its characteristics, here we leave you the most relevant:

  1. Non-Fungible Tokens cannot be imitated. Although they can be replicated, there will only be one original asset in the entire world.
  2. They do not admit exchanges, since they are “non-fungible”.
  3. An NFT does not have a tangible representation or form. It is a digital asset or voucher, not a “real” object. They are basically pieces of digital content that are stored on a server.
  4. Some NFTs support different value ranges depending on their uniqueness. An example of them is the NBA digital or collectible card games.
  5. These non-fungible assets are based on the famous “block chain”, or blockchain. Therefore, they cannot be hacked or counterfeited, as this technology is 100% decentralized.
  6. You can buy or sell them online, just like other assets or properties. But in this case the operations are based on the blockchain.

These are some of its features, but the truth is that the list is longer. In fact, it includes particularities related to its standards and origins that are also worth knowing.

How these digital assets work

what are nfts

To understand all the dimensions of these assets or digital contentthat is, to know well what is un NFT, you need to analyze its operation.

The first thing you should know is that any digital content can become a token thanks to Blockchain technology and smart contracts.

Both provide NFTs with a series of metadata that guarantee their authenticity, while clearly identifying their author.

Additionally, they allow to identify their acquisition and departure value, as well as each and every one of the transactions that they have undergone from the first moment of their creation.

An NFT can be a meme, an info product like an ebook, a JPEG file, and even a tweet.

When they are converted into a token, a digital certificate of ownership and authenticity is created for them.

This means that only the person who has acquired it owns the property rights. And as for smart contracts, it should also be noted that these are very useful.

For example, they serve to assure creators that they will receive a part of the profits derived from the sale of their tokens in the future.

Specifically, NFTs work with technology blockchain; the same of the cryptocurrencies like Bitcoin.

This technology works through a network of totally decentralized computers, whose nodes or blocks are linked and secured thanks to cryptography.

You should know that each NFT is assigned a digital certificate of authenticity, whose metadata cannot be altered or modified.

Do you wonder what that means?, or what is its importance? It’s simple: if you buy a Non-Fungible Token there will always be proof of its first value and the amount you have paid.

How to invest your money in an NFT

how to invest money in nftCurrently, a large part of NFTs are based on the standards of Ethereum and its blockchain.

And since this technology is widely popular, it is very easy, safe and simple to carry out buying or selling operations.

For this you must use certain walletsalso known as “digital wallets”, that operate with said network.

However, you must remember that you will not be able to make active purchases, as is the case with digital currencies, since NFTs are unique works.

You can create, or buy and sell a token through the famous “NFT marketplaces”, as would be the case with MakersPlace, Valuable either Niftygateway.

Right there, the prices of these assets are stipulated, which can be fixed, or adjusted to an auction model.

These markets concentrate a large number of NFT creators, as well as artists who offer their tokens for sale; and of course, to the owners of assets that carry out operations with them.

Payments are made in cryptocurrencies, such as Ethereum, and therefore, you need to have a cryptocurrency wallet to carry out this type of transaction.

Why are they valued at millions of dollars?

Today the most important question you should ask yourself is not what is an NFT. But why these digital assets are valued at billions of dollars.

There are more and more investors willing to buy Non-Fungible Tokens worldwide, since they are convinced that their value will increase over time.

Therefore, the time will come when they will be able to sell them for a larger amount of money, considering that they are unique assets.

In fact, millionaire operations have already been closed in this regard that have caused surprise and stir. Here are some of them:

  • The token of a Mike Winkelman art piece that was auctioned for $69 million.
  • A 10-second video that sold for $6 million.
  • The Nyan Cat Gif, which later became a meme, and which sold for over half a million dollars.
  • The digital works of the singer “grimes” which sold for more than $6 million dollars.
  • The drawing of a rock that was sold for 260 thousand euros.
  • The first tweet in history that was sold for $2.9 million. The author was the founder of Twitterthe millionaire Jack Dorsey. (This NFT was purchased by a renowned Malaysian businessman.)

The potential of NFTs

At this point you should already have a clearer idea of ​​what it is. a NFT, how it works and how you can invest money in them in a safe and decentralized way.

For many, Non-Fungible Tokens are one of the most powerful assets in the modern world in terms of generating wealth.

Therefore, you should not underestimate its potential reach and power, especially if you want to expand your wealth thanks to investments that come to life in the crypto environment.

Continue reading: What is Nequi and how to use this app to manage your money

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