What Are NFTs, How Do They Work, and Where Are They Stored?
NFTs (non-fungible tokens) have become a big craze over the last few months. Creators and investors have become millionaires by trading in NFTs, but only the people who know how to use them have raked in the millions like they do with other innovative crypto and blockchain-based technologies. How do people buy NFTs, and where do they go afterwards?
What Are NFTs?
NFTs is an acronym for “non-fungible tokens.” A non-fungible token is a non-exchangeable unit of data, digital item, or file that exists. It is sold and traded as a blockchain in a blockchain marketplace. Put simply, NFTs are crypto-art.
Digital signatures make each NFTs unique from another and give them provable ownership, which means there can’t be two or more identical ones. Being non-fungible and with digital signatures, NFTs can’t be exchanged or traded as fungible commodities, which are defined by value instead of unique properties (such as the NFT signatures). Examples of NFTs in the digital space today include:
- Digital NFT collectibles such as “crypto punks”, bored apes, mutant apes, trading cards, etc., which are often found in NFT communities like the NFT Club
- Unique digital artwork
- Essays
- Tokenized memes
- Digital goods, like a digital sneaker, domain names, pens, books, etc., created or purchased
- Digital tickets such as Ethereum’s POAPs (Proof of attendance protocol)
NFTs vs. Cryptocurrency
NFTs differ from cryptocurrencies in two main ways:
Uniqueness
Each NFT has a digital signature, unique to itself, which differentiates it from the rest. This means there can not be two or more identical NFTs ever and cannot exchange for another identical one. No one NFT can have the same value as another, but units of currency can be exchanged, including cryptocurrencies.
No division
NFTs can’t be divided into smaller units in both size and value because they’re individual digital units. You can divide units of currency, both physical and cryptocurrencies such as USD, Bitcoin, Ethereum, and EUR into smaller or larger units.
How Do NFTs Work?
NFTs are minted like cryptocurrencies are mined in crypto mining. In blockchain, these terms are used in the crypto world to mean ‘create’. When NFTs are minted they come out with a unique cryptographic signature (certificate). This signature defines the token as its identity and proof of ownership and determines who owns its rights.
The NFTs certificate and signature are associated with a particular digital wallet and address (such as a user account), making it impossible for someone else to claim the right of its ownership. However, the NFTs owner can freely transfer it, with the signature, to another person on the blockchain or exchange it for an amount of cryptocurrency. The transfer’s date and time are logged on the NFTs public ledger to show the change in ownership for everyone else to see.
Where Do You Buy NFTs?
You buy NFTs in NFT marketplaces. Examples of NFT marketplaces on the internet are:
- Nifty Gateway: For High-Quality NFTs
- OpenSea: Considered the widely used NFT Marketplace with varieties and cheap ones
- SuperRare: Considered an exclusive NFT Marketplace
Other NFT marketplaces include:
- MakersPlace
- Rarible
- Foundation
- Atomic Market
- Mintable
Where Do Your NFTs Go After Buying Them?
Most NFT newcomers in the NFTs space ask, “where do you store NFTs or where are your NFTs actually located?” It’s the digital certificate token that’s actually stored on the blockchain. The associated NFT file, which people see, is usually stored on a platform where people can sell, purchase or trade it, such as a marketplace.
After you buy an NFT, the token (certificate) will be stored in crypto wallets under a public digital ledger, which people can view in block explorers such as etherscan.io. The NFT file (or image) lives somewhere on the internet web, usually, the marketplace or website that vendors it.
What Do You Need to Buy NFT?
You need three things to buy NFTs:
- A Web3 Crypto Wallet such as the MetaMask
- An NFT marketplace account: If you join NFT communities like the NFT Club, you’ll know market palace and token trends to follow
- Cryptocurrency, especially Ethereum (ETH), works in the most popular NFT sites
With these items or accounts, you can buy any NFT you want, anywhere and anytime. As you do before any other purchase, do your research before purchasing an NFT.
Endnote
NFTs have taken collectibles and the digital art world by storm. There’s also an increasing number of new crypto audiences and digital artists that, thanks to NFTs, are changing their lives. To artists, NFTs are a way of proving proper ownership and earning from it. To audiences (collectors and celebrities), NFTs are a way of owning digital assets and investments. You can join the conversations of NFTs by creating, trading, investing, ownership, sales and purchases in NFT communities.
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OhNoRipple via https://www.ohnocrypto.com/ @PR Desk, @Khareem Sudlow
