NFTs, or non-fungible tokens, are a new type of digital asset that is growing in popularity. In this guide, we’ll explore what NFTs are and how they differ from other types of cryptocurrencies.
We’ll also take a look at some of the pros and cons of owning NFTs as well as how to buy them and sell them for profit.
What is NFT?
NFT is a digital representation of anything that has unique attributes and value. In other words, it’s an asset with unique properties that can be traded, bought and sold in the digital world.
The best way to think about it is that NFTs are like collectibles like art pieces, baseball cards or Beanie Babies—except instead of having a physical copy you have an online version stored on the blockchain.
Let’s say bought with USTC, the same piece of art could be sold again, and again over time for higher and higher USTC price as fewer collectors own that piece, which creates scarcity for the item.
The trading pairs of a non-fungible token (NFT) are the fungible tokens that can be exchanged for it. For example, the trading pairs of a CryptoKitty are ETH and BTC.
In most cases, the more trading pairs such as SHIB/USDT a token has, the more liquid it will be. This is because the more places you can spend a crypto, the easier it is to convert your holdings into something you can use to pay your bills or buy groceries.
How are NFTs different from cryptocurrency?
There are many ways that NFTs differ from cryptocurrency.
NFTs are unique and can’t be copied. In contrast, cryptocurrency is fungible—it’s all the same commodity with the same value.
NFTs aren’t controlled by a central authority; they’re completely decentralized while cryptocurrency is controlled by a central authority (like Bitcoin).
Why own NFTs?
Non-Fungible Tokens (NFTs) are digital assets that are unique in that they cannot be replicated or reproduced like other types of digital files. They represent ownership over a specific good, service or asset rather than just being something you own for the sake of owning it (like other cryptocurrencies).
There are two main reasons why NFTs are a good investment.
First, it is a newer, relatively untapped market: there is no reason to assume that what has happened in the past will be the same in the future, and this is because of a number of factors. The blockchain technology gives it a level of security that NFTs have not had in the past and this means that it has the potential to reach a broader audience, which means more people looking to buy.
Second, if you compare the NFT market to traditional collectibles like art or classic cars, you will see that there is no guarantee that similar items will appreciate in value over time. In fact, many items on these markets have fluctuated greatly over time.
NFTs aren’t just a new way to express yourself as an individual, they are also a new way to connect with your favorite artists and artists in general. In the past, you had to buy their music or go see them perform live in order to be part of the artist’s community. Now you can have a physical piece that represents your support of their work, which is something no other medium has been able to do before now.
Creating, buying, and selling NFTs
In order to create a non-fungible token, you’ll need to use a smart contract. A smart contract is an escrow of sorts that allows for the transfer of information between parties.
Once you’ve written the code and deployed it onto the Ethereum blockchain, you’re ready to mint new tokens! Minting is when someone creates an instance of their ERC721 token using the same minting logic they used during creation.
Step 1: Get a Crypto Wallet
You’re going to need a crypto wallet before you can buy, sell or trade NFTs. A crypto wallet is simply an app (or website) that lets you store your cryptocurrency. You can think of it as your bank account for cryptocurrencies—it’s where you keep all of your crypto funds.
There are many kinds of crypto wallets out there, each with their own pros and cons. The most common types are: web-based wallets; desktop wallets; mobile wallets; hardware wallets; paper wallets; brain wallets and even Ledger Nano S hardware device-specific MyEtherWallet (MEW) compatible applications like Jaxx or Exodus Wallet services like Coinbase which allow access through their apps via third party websites such as MyEtherWallet app as well.
Step 2: Buy Crypto
To begin, you’ll want to purchase cryptocurrency. The good news is that there are several ways to do this.
- Buy crypto with fiat (USD, EUR, etc.)
- Buy crypto with other cryptocurrencies
- Buy crypto with cash
- Buy crypto with a credit card or debit card at a cryptocurrency exchange like KuCoin, Coinbase or Gemini.
Step 3: Find a Marketplace
Finding a marketplace is the next step to turning your NFT into money.
There are many marketplaces out there to choose from, each with different features and use cases. While some marketplaces are built specifically for trading rare items, others allow you to sell or buy anything (including non-fungible tokens).
Step 4: Mint an NFT
Minting is the process of creating a unique non-fungible token (NFT). There are various ways to create an NFT, including 3D printing and laser etching. You can also mint your own using materials like metal, plastic, wood and paper. By minting your own NFTs you can be sure that no one else will ever have the same one!
Step 5: Buy or Sell NFTs
Now that you know the basics of non-fungible tokens, it’s time to learn how to buy them. We’ll cover a few different ways to do so:
- Buying NFTs on a centralized exchange. The most straightforward way is buying an NFT on a centralized exchange. However, this will likely be more expensive than other options and can be risky as well if your funds are not stored safely in a wallet with cold storage support and/or 2FA enabled .
- Buying NFTs through a decentralized marketplace such as OpenSea or Rarebits. This option offers significantly lower transaction fees than buying directly from an exchange, which makes them ideal for frequent transactions and small purchases.