Steemit Crypto Academy Contest / S2W4 - What are NFTs. by @oguzvic

in hive-108451 •  2 months ago  (edited)

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What are NFTs ?

NFT means Non-Fungible Tokens. They are assets that are digital and let you show ownership of a value store. It could be intangible things like virtual art or something tangible like fine art or real estate. Each NFT is unique and cannot be replicated as they have unique codes of identification that differentiate them from each other.

This makes it possible to tokenize both tangible and intangible assets.
Fungible tokens, which resemble cash, stand in sharp contrast to this.

In the end, the basic idea behind NFTs is that you can invest in valuable things without actually having to store or own them. This makes it simple to purchase and sell NFTs in the open market as a result.

Differences between fungible and non-fungible tokens

Fungible tokensNon-fungible tokens
Fungible tokens can simply be interchanged, even though there is no added value involved in exchanging themSince each non-fungible token represents a distinct asset, they cannot be interchanged
The number of tokens under a person's possession determines how much value can be transferredNFT's value of the special asset it represents aids in the transfer of value
Tokens that are fungible can be broken up into smaller pieces, and the smaller pieces can assist in paying down the bigger paymentsNFTs are valued as a single unit and cannot be divided.
The ERC-20 standard is necessary for fungible tokensThe ERC-721 standard is used by non-fungible tokens

Are NFTs interchangeable?

NFTs are not interchangeable because each of them are unique.

Differences between an nft and other currencies

By definition, cryptocurrencies are fungible. NFTs are not, as their name implies. An Ethereum is equivalent to another Ethereum, but an NFT is not equivalent to another NFT. Each NFT is distinct, special, and valued differently depending on how valuable and in demand they are.

Is there an Nft marketplace ?

Yes, several marketplaces for NFTs exist. The NFT marketplace is your entry point to taking part in the buying and selling of these digital goods, including everything from music to art to complete virtual universes. Numerous NFT marketplaces exist, and many of them specialize on a particular market or niche.

One of the biggest NFT markets now operating is Opensea. Numerous well-liked NFTs are hosted there, including those related to art, photography, music.

Ethereum, USDC and Solana are the main cryptocurrencies utilized on OpenSea, while additional cryptocurrencies are available as payment choices. Other marketplaces include rarible, binance NFT marketplace, NBA top shot, SuperRare

how to invest in NFT

  • First, join an NFT Marketplace and create an account. Be careful because numerous artists and personalities have impersonators that attempt to sell fake NFTs.

  • You must make a digital wallet in order to store the keys to your NFT and cryptocurrencies.
    You can utilize a built-in wallet or an external wallet with a cryptocurrency exchange.

  • Next, put some funds in your account. Then, Choose the NFT you want to buy and purchase it.

How to create a new NFT

  • Choose your item. You must decide whatever special digital asset you want to convert into an NFT.

  • Next, It's time to begin minting your special digital asset into an NFT after you've chosen it.
    Choosing the blockchain technology you want to use for your NFT is the first step in doing this. Ethereum is the most well-liked among NFT creators and artists. Others include binance smart chain and Tezos

  • Because you'll need some cryptocurrency to fund your initial investment, you should build a digital wallet for your NFT if you don't already have one. The leading NFT wallets include Trust Wallet and Metamask.

  • After that, Choose your NFT marketplace. You must decide on an NFT marketplace for it.

  • The next step is to upload your file to the marketplace of your choice.

  • Establish the sales procedure:
    Choosing how to monetize your NFT is the last step in the NFT minting process.
    You can, depending on the platform:
    Sell it for a set amount, Create a timed auction or launch an endless auction.
    If you decide to host an auction, you must choose the minimum bid price, the royalties you want to continue receiving if your NFT is sold again on the secondary marketplace. If you set the minimum price too low, you might not make any money on your NFT sale, thus keep fees in mind when making your decision.

Is it possible to have an nft stolen ?

Although it would be very difficult, but Yes, your NFT can be stolen when you click on a malicious link, disclose your secret phrase, or through user error. Technically, your NFT cannot be taken out of thin air; rather, a hacker would need access to your wallet, where your NFTs are kept.

why use a distributed file system like IPFS in this area?

Off-chain data storage is how most NFTs work. A URL is utilized to direct users to the data on the internet from the NFT. Links, as you are aware, might expire, evolve, or take you in unexpected directions.
An easy fix for this is IPFS. Your files don't come from a conventional URL since the network you are using is built on the blockchain and uses cryptography, so you can be confident they will always be available.

Instead of accessing the material from a single domain or server like regular HTTP does, IPFS uses a network of several sites to help keep your files provided the file is being hosted on the network by someone.

How are NFTs used in art, video games and collectible card games? And how are NFTs revolutionizing property titles?

Digital art was frequently replicated before NFTs, making it nearly hard to distinguish an original file from a clone. Digital artworks can now be identified, validated, and safely preserved on and offline thanks to NFTs. They can be distinguished from duplicates quickly and easily. This enables artists to profit from the sale of unique or limited edition copies of their digitized works of art.

NFTs are increasingly beginning to be employed in conventional (physical) art as well.

Nfts are quite useful in video games. ERC-721 is the first and most widely used NFT standard.
A video game called CryptoKitties, which lets players buy, collect, and sell virtual cats, was its first application for profit.
Collectible video games appear to be the ideal setting for NFT. They enable gamers to acquire exclusive things and to retain complete ownership of those items. Due to this, projects of this nature have rapidly increased during the past year.

NFTs are merely distinct digital titles (tokens) to actual or imagined property that are kept on a blockchain ledger.
The likelihood of harm from fraud is theoretically decreased, and an owner's capacity to demonstrate that they actually own something is strengthened
NFTs can also be used to symbolize the ownership of tangible goods or real estate. Fractional ownership might be used as an illustration.

How are NFTs Regulated

There is still disagreement over how to handle NFTs, which makes it difficult to set clear regulatory norms.

NFTs can now be seen in one of three ways: as commodities, securities, or intellectual property.

NFTs as commodities:
Commodities are defined by US law as exchangeable services, goods, and rights, including money and interest rates, that are traded as commercial articles.

The Commodity Exchange Act (CEA) may be implemented if it is decided that NFTs should be classified as commodities. In this situation, NFT transactions may be subject to CEA laws on manipulative trading.

Nfts as securities:
Securities are a different kind of NFTs that is possible. NFTs must, however, satisfy the Howey Test in order for this to be the case, as it serves as the foundation for classifying an asset as a security.

According to the Howey Test, security is an investment in money that is anticipated to generate benefit as a result of other people's labor. For instance, if you purchase Google shares, you anticipate making money off of Google's future endeavors.

The US Securities Act and the Security Exchange Act must be applied if NFTs are deemed to be securities. In this approach, all markets would be rigorously regulated and only authorized brokers and exchanges will be able to trade NFTs.

Nft as intellectual properties:
Intellectual property is another category for NFTs. By tokenizing their assets, people may make sure that the original asset is linked to just one person thanks to NFTs.

However, as non-fungible tokens may be used to represent ownership of a work or patent, this could lead to issues and concerns over intellectual property.

It is true that many NFTs contain smart contract language defining intellectual property phrases. But because NFTs cannot stop the replication and marketing of the said asset, the enforcement of these terms forces us to consider legal frameworks once more.

In brief, before issuing their NFTs, creators and issuers are recommended to confirm that they hold the necessary intellectual property rights.

what are the solutions to the limits of NFT development?

Minting of NFTs should be made cheaper and easier. Furthermore, IPFS should be better implemented in NFT.

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NFTs are valued as a single unit and cannot be divided.

Yes, just like how we can have 1 btc, or 0.5 or even 0.0003 btc we can not have 1/2 of a bored ape of half of a music albums collection.

One of the biggest NFT markets now operating is Opensea

To me I think open sea is the biggest. Can you believe this is the first time I am hearing about other market places for nft.

The monent I wanted to learn and work with nfts I only heard about open sea and that’s where I have an nft.

Because you'll need some cryptocurrency to fund your initial investment

Yes, but we should also realise that we can actually mint NFT free of charge on the polygon network.

Although it would be very difficult, but Yes, your NFT can be stolen when you click on a malicious link

Yes this is very true.

Am NFT can be stolen. Through those malicious links you are taking of. Sometimes it surprises me how easily hackers can get to the private dms of nft owners and even lie to them that they are the moderators of Those sites and end up stealing their digitals.

Thanks for your comment. It's nice to know nfts can be minted for free on the polygon network

From your explanation, it seems quite easy to create an NFT

NFT is an intellectual property. It must be made from your own ideas. It will never match any other art, meaning every NFT art must be unique. You have presented today's post very nicely. Liked it a lot. Made a very good entry

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In brief, before issuing their NFTs, creators and issuers are recommended to confirm that they hold the necessary intellectual property rights.

Yea this is right and a nice development because it increase the reliability and validity of the NFT market and the NFT asset to be sold to the investors.

Thanks for sharing such lovely article.

wishing you success.