Non-fungible tokens (NFTs) have rapidly emerged as a crucial component of the digital world, providing a new method to own and exchange unique digital objects. From record-breaking digital art sales to the rise of virtual collectibles, NFTs are making waves across a vast spectrum. As these digital assets gain in popularity, it’s critical to understand what NFTs are and why they are generating so much attention.
What Are NFTs?
An NFT is a one-of-a-kind digital asset that indicates ownership and authenticity of a certain piece of material, such as an artwork, music, film, or any other virtual object. NFTs differ from cryptocurrencies in the sense that they are unique and cannot be replaced by another token of equal value. NFTs can be purchased through cryptocurrencies, such as Bitcoin or Ethereum.
NFTs were first released in 2014, but have grown in popularity in recent years because of their use in digital art and collectibles. They allow artists, content creators, and collectors to purchase, sell, and trade digital assets in a decentralised environment.
How Do NFTs Work?
NFTs function with Blockchain networks. The most commonly used platform is the Ethereum network. A Blockchain is a type of digital, decentralised ledger that can store data regarding transactions across a network of computers in such a manner that interference or alteration to the transactions is impossible. It contains a unique identification code for each NFT to ensure that ownership and validity are maintained.
NFTs are formed by way of including digital content to the Blockchain. It could be in the form of a picture, a video, or music. This file is associated with a unique token containing metadata that describes and establishes the digital asset’s history. This ensures that the asset’s historical record is both safe and visible. While Ethereum is the most popular Blockchain for NFTs, other Blockchains also support NFT generation using alternative terminology or protocols.
Steps To Buying NFTs
To start building your NFT collection, follow these essential steps.
Get a Digital Wallet: First, you will need a digital wallet that can handle NFTs and cryptocurrencies. This wallet will hold your NFTs and the cryptocurrency required for the transaction. Popular wallets include MetaMask, Trust Wallet, and Coinbase Wallet.
Purchase Cryptocurrency: You will need to buy cryptocurrency, such as Ether (ETH), depending on the currencies accepted by your preferred NFT provider. Major exchanges, such as Coinbase, Kraken, eToro, PayPal and Robinhood accept credit cards and other payment options for cryptocurrency purchases. After acquiring the cryptocurrency, send it to your digital wallet.
Deposit Funds: Deposit funds into your exchange account using fiat currency and purchase the required cryptocurrency. Move the cryptocurrency to your digital wallet’s address linked to your NFT account.
Choose An NFT Marketplace: Select an NFT marketplace, such as OpenSea, Binance or Magic Eden. Connect your digital wallet to the marketplace to start buying your NFTs.
Buy NFTs: NFTs can be listed either with a fixed price or through an auction. While auction listings could take many days to complete, fixed price listings will allow you to buy them immediately. Follow the marketplace’s instructions to execute the transaction after you have selected the NFT you wish to purchase. Also keep in mind any transaction costs.
Popular Indian Celebrities Investing In NFTs
Many prominent Indian celebrities have taken an interest in NFTs and are exploring this new digital frontier. Indian cricket icon Sachin Tendulkar has invested in the NFT platform, Rario.
Bollywood legend Amitabh Bachchan has also embraced NFTs, offering collections of unique digital artefacts, such as autographed movie posters. Other film celebrities, such as Salman Khan have entered the NFT market by launching their own NFT collection on the BollyCoin platform. Cricketer Dinesh Karthik entered the NFT market by distributing a digital token representing a memorable match-winning moment, thus allowing fans to own a piece of the sport’s history.
Should You Invest In NFTs?
NFTs are a fascinating and fast expanding part of the digital economy, but they also carry inherent threats and uncertainties. Given their novelty and market changes, NFT investments should be approached with prudence and educated judgement. The decision to invest in NFTs is ultimately a matter of personal preference and risk tolerance.
Says Vedang Vatsa, founder, Hashtag Web 3.0: “NFTs can be a good long-term investment, but it’s important to understand the risks and factors, such as rarity, the artist’s reputation, utility, and market trends, all of which can influence their value. However, it’s crucial to not invest more than you can afford to lose.”
Adds Sathvik Vishwanath, co-founder and CEO, Unocoin: “For creators looking to successfully market their NFTs, it’s crucial to build a strong online presence through social media engagement and a solid following. Also, offering unique special features or exclusive content can significantly increase the appeal and market value of NFTs. Collaborating with influencers can also enhance visibility and attract potential buyers. By combining these strategies, creators can effectively promote their work and stand out in the competitive NFT space.”
