NFT refers to Non-fungible token and is basically anything that can be converted into a digital form. Everything from drawing to photos, videos, GIFs, music, selfies, and even a tweet can be turned into an NFT, which can be traded online using cryptocurrency.
But what makes NFTs different from other digital forms is that it is backed by Blockchain technology. For starters, Blockchain is a distributed ledger where all transactions are recorded and is similar to your bank passbook, except for the fact that all the transactions are transparent and can be seen by anyone, and cannot be altered or modified once recorded. After 2021, Non Fungible Tokens are gaining huge popularity now because they are becoming a rapidly popular way to showcase and sell your digital artwork. Billion dollars have been spent on NFTs and it has slowly moved into public awareness, eventually expanding into mainstream adoption in the early 2020s.
How Does it work?
NFTs works on blockchain as it gives users the complete freehold of a digital asset. For example, if you are a sketch artist and if you convert your digital asset to an NFT, what you get is proof of ownership, powered by blockchain. Digital art is then recorded on Blockchain, mentioning that you own the particular NFT. This gives you full ownership-which cannot be edited by anyone, including the marketplace owner. An NFT is thus created to get exclusive ownership and only one owner at a time. Apart from exclusive ownership, NFT owners can digitally sight their artwork and store information in their NFTs.
Who can Buy NFTs?
Any person who has a cryptocurrency wallet can buy an NFT. This is the only requirement to purchase an NFT. Further, what is the best part is that you don’t need any KYC documents to purchase any form of the digital art, all you need is a cryptocurrency wallet powered by Metamask and an NFT marketplace where you can purchase and sell Non Fungible Tokens.
Risk factors associated with buying NFTs?
Like any other structure, NFTs have a dark side too. In the recent incidents of NFTs, scams have been reported including fake emergence marketplace, unverified sellers often imitate as a real artist and selling copies of their artwork for half of the price.
One more risk associated with NFTs that cannot be swept under the rug is the unquestionably negative impact on the environment.