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Mohamed
Mohamed

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What Are NFTS And Why Is Everyone Talking About Them?

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At the end of 2021, the Collins Dictionary determined that NTFs are a " unique digital certificate that is registered in a chain of blocks that are used to record the ownership of any asset . "

The letters NFT for its acronym in English mean non-fungible token, referring to an asset that cannot be replaced or consumed, they are registered through a smart contract, which is assigned a unique number, guaranteeing security and tranquility to the owners of these digital assets .

In this registry, the unique data of the owner and the creator are reflected, allowing security, in addition to copyright through a chain of blocks; When talking about a chain of blocks, it refers to a blockchain, that is, a science that approves the transfer of data in an encrypted and decentralized manner, assigning it absolute security.

This is the reason why blockchains have been intimately related to cryptocurrencies for some time now and recently to different digital goods ; Likewise, an NFT can be any digital content such as videos, images, graphics, etc.

NFTs are classified as a non-expendable good; that is to say that it cannot be consumed with its use, it is not substitutable and it cannot be replaced. A work of art is a non-expendable asset as it is a unique piece, unrepeatable and irreplaceable by another.

They are used to represent any type of item, such as video games, virtual items, collectibles, music, videos, works of art, among others.

Unique features of NFTs

NFTs stand out for having four differentiating characteristics from any other asset.

  • The main characteristic of NFTs or Non-Fungible Tokens is that they are unique: they are generally personal and therefore no two are the same, there is a certificate that shows who the owner is, and it can also be a controlled, protected and certified authorship.
  • They are indestructible: they do not suffer from the inclemency of the passage of time like any other asset, remaining unchanged, they are also verifiable, because they are encrypted in a block chain or blockchain that tracks the entire history of that NFT from its creation to the current, verifying from who has been the first owner to the current owner.
  • They are not interoperable: they cannot be exchanged or modified in any way for other assets with equivalent values.
  • Total ownership: when you buy an NFT you have full ownership, it is not a limited use license with usufructuary use.

How NFTs work

NFTs work through a chain of blocks or blockchain similar to the technology used in cryptocurrencies , which work through a decentralized computer network with nodes linked and secured by cryptography. Each node or block links a previous block, as well as the date and transaction data, being resistant to data modification by design.

Each NFT is entrusted with a digital certificate of authenticity, made up of unmodifiable metadata that guarantees its authenticity, also registering its initial or starting value, all the acquisitions and transactions that it has suffered and the author of the same.

In other words, every time a digital asset tokenized with NFT is acquired, a certificate will always be obtained reflecting the initial value and its current value. Generally NFTs are based on the standards of the Ethereum network and their respective blockchain.

Due to the advantages provided by the Ethereum network, it is easy to operate with NFTs, trade them in a simple way, using certain wallets compatible with Ethereum.

In this way, an intelligent contract or 'Smart contract' is programmed: within it you will be able to find all the information related to the part that has been acquired, in the same way, all the necessary information about the transactions that have been acquired is reflected in this contract. can be made with the new acquisition.

Advantages of NFTs

This new technology provides a number of advantages to users which favors their choice among other digital goods , among which we can highlight:

Reliability

Thanks to blockchain technology , which makes it possible to have complete knowledge of the origin of an NFT and the details of the copyright, they have a high level of reliability and trustworthiness.

Likewise, NFTs are capable of including all the information about the author, which will remain attached to the NFT , always preventing counterfeiting and theft of works of art.

Immutability

Through smart contracts, developers are able to establish limits on the creation and modification of NFTs, in addition to establishing that said elements cannot be changed, in this way it can be demonstrated that it is a unique and original piece.

They are programmable

Different types of NFT can be found, some being more complex than others, they can be created and programmed very easily.

Security

When an NFT is sold, a unique cryptographic token is generated that offers an extra layer of security, ensuring that each asset can be tracked and verified.

Exclusiveness

NFTs can only have one owner, they can be resold, but the creator will always receive a part of the profit for each confirmed sale.

Decentralization

Direct interaction between customer and seller eliminates extra expenses.

Disadvantages of NFTs

Like any new technology, it is supported by some and criticized by many others; So far, the following aspects have been highlighted as disadvantages of NFTs :

There is a high risk of loss

Due to the vulnerability of the digital market, there is a high risk of loss, which is usually missed by decentralized platforms.

Are few known

Although they are very popular, these digital assets are still little known and therefore most users are unaware of the exact operation and the risks to which they are exposed.

Bugs are not yet controlled by platforms

As the statement indicates, the platforms still do not control possible errors that may occur during transactions.

Some level of knowledge required

Before making any type of investment, the user must receive a type of preparation, because this type of asset is not as manageable as cryptocurrencies.

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Why are NFTs so popular?

Due to the ravages of the pandemic, all crypto assets, Blockchain and cryptocurrencies increased in popularity among their users and individuals, their degree of acceptance increasing.

For their part, large corporations began to allocate a large part of their assets to the investment of crypto assets; finding in the NFTs the solution to different liquidity problems, they have even used them to solve some problems generated by the recent world inflation.

One of the aspects that has made NFTs most popular among users is the value that these assets can acquire and the millions of income they are generating; They were usually used for the purchase of digital works of art, currently they have become popular among musical groups who sell their albums and videos through NFTs .

How to buy and sell NFTs?

Before making any type of decision, every user should know that this type of investment is a bit complex, in addition to the fact that there is no regulated market where investments can be made with NFTs , it is for this reason that before making any type of transaction With these new assets, it is important to take into account the following recommendations.

  • Read, investigate and learn about everything related to this type of contract before making the transaction: on the web and on the different social networks you can find a large number of tutorials as well as related information, provided by expert investors.
  • An adequate and safe platform must be chosen: as a result of the boom of these digital assets, a large number of platforms can be found on the web that provide everything that new NFT investors need , it is also recommended to investigate, listen to the recommendations of other investors and choose the safest.
  • Be sure of the type of piece in which you plan to invest, the profitability, in addition to researching the owner, the people behind the project, its developers, the community, etc.
  • Because the investment strategy of NFTs is revaluation over time, it is also important to take into account the time that the asset will be held, in order to be sure of how much can be paid for it.
  • Once all this information is obtained, proceed to enter the platform of choice, to make the investment in which you are interested and follow the instructions on the page, it will be necessary to have a wallet connection to enter the auctions and process the payments.

Buy NFTs

  • Within the platform, a review of the price history (when pertinent) is made, a review of the author's history and the latest offers made by the piece . Then an offer is made to be part of the auction, when it is accepted the wallet will be activated. The value of the piece will be immediately reflected on the screen; To complete the operation, the payment is made.

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Sell ​​NFTs

There are many ways to make investments with NFTs , through different business models, including artists, musicians, project developers, among others.

To sell the NFTs , proceed in the same way as to buy them, in addition to following the following steps:

  • As with purchasing assets, the platform to be used must be chosen carefully.
  • The safest platforms are the decentralized ones that use the Ethereum blockchain ; An account must be created on the platform of choice and the wallet must be linked.
  • When the linked wallet has been created, a secure password must be entered, "signed" digitally, being from that moment in a position to proceed to create the first NFT .
  • This process is done as easily as sending an attachment to an email or uploading a photo to social networks.
  • In most platforms, you should look for the β€œCreate a Collection” section, a page will immediately open to build a collection of NFTs; You must also place a name and a "logo", or cover photo, then proceed to upload the file you want to convert to NFT.
  • After uploading the file, the form must be completed with the name, followed by a description and any other requirements that the platform may request to better identify the NFT . Among these requirements we can highlight:
  • -External Link: a preferred link must be chosen; it is attached to the NFT and allows users to click on the parts that are for sale, in addition to obtaining more details about the NFT.

-Propretors: this section is used to add a personal touch or β€œcustomize” the NFTs .

-Levels and Stats: this section works similar to Propretores and is used to give more customization to NFTs . This option is not required to complete.

  • When filling out this form, the most important option is the one stated as β€œ Blockchain ”. In it you can select in which chain of blocks the NFT will be registered ; If Ethereum is chosen, to publish the sale of the assets, a gas fee must be paid, which is established according to the amount of web traffic. To sell the NFT for free on the web you can find several platforms, but also when the sale is made, most charge a 2.5% commission.
  • Once this option is completed, you must click on the β€œCreate” button, from that moment a new NFT will have been created and can be placed for sale; also on that same screen you can locate the "Sell" button.
  • A new window will immediately open with the options for the NFT and assign it a sale price in ETH; from there you can enter the amount with which you want to publish, from that moment the system will automatically determine the equivalent value according to the ETH price and also the value of the commission in case the sale is made.
  • Next, you must click on Complete listing, at this time a section will appear where you must "sign" NFT . This point is used to grant authenticity and authorship to the NFT and communicate to the platform that the digital asset is for sale by signing the wallet.
  • From that moment the NFT will appear in the marketplace of the selected platform and will be ready to receive offers.

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