Just like cryptocurrencies, people can buy or sell NFTs on specialised platforms such as Mintable, OpenSea, Nifty Gateway and Rarible. The data of any transaction related to the token is recorded on the blockchain
One of the terms that has been in the headlines lately is NFTs or Non-Fungible Tokens. While news items featuring NFTs selling for millions of dollars have become increasingly frequent, many are still confused about what the term actually means.
What are NFTs?
These tokens are digital assets which exist on a record of transactions kept on networked computers, or blockchains. The blockchain functions as a public ledger and allows any individual to verify the authenticity of the non-fungible token and who owns it. The tokens are non-fungible, meaning they cannot be exchanged for another identical asset of the same value.
What does an NFT consist of and how can you buy these tokens?
People can buy NFTs with cryptocurrencies, dollars and fiat currencies. Just like cryptocurrencies, people can buy or sell NFTs on specialised platforms such as Mintable, OpenSea, Nifty Gateway and Rarible. The data of any transaction related to the token is recorded on the blockchain.
NFTs are not restricted to digital art. They can exist in different forms such as music, videos, images and text, etc. Users can buy and sell even tweets as NFTs, if they are unique.
NFTs are quite popular among investors because of their rising prices. They can hold it and sell after witnessing a price hike. Some buyers sell NFTs within a day, some hold it for few days to gain profit.
The tokens can solve artists’ problems related to monetization of artwork. With NFT, artists can receive a royalty every time the token is sold.
Right now, the market for NFTs is seeing a boom, with Bollywood actors Salman Khan, Amitabh Bachchan and Sunny Leone making their foray into the domain.
What are the issues with NFTs?
There is no guarantee of constant profit with NFTs as the sector is unregulated. Another problem with NFTs is no one can be sure of its value. If the hype ends, for any reason, the investors can face huge losses. The technical processes involved in trading the tokens can also be daunting and complex for many buyers.
The process of buying the non-fungible tokens involves fees to pay for massively energy-intensive computer transactions, or mining, that are need to verify each transaction. The process of mining has also come under scrutiny from environmentalists, who have stated that the amount of energy generated by the process emits a lot of greenhouse gases, which in turn lead to the planet heating up.