From art to music and now tweets to even memes, Non-fungible Tokens (NFTs) are increasingly becoming a popular method of buying and selling digital assets that hold value. It has presented an opportunity for many creators to monetize their creativity and talent and has helped collectors find a more secure way to purchase and store their valuables.
NFTs are one of the fastest-growing sectors within the crypto sphere, with the NFT market rising to just over $41 billion by the end of 2021, according to blockchain analytics firm, Chainalysis. It is important to first understand what they are and how they can be used to trade these asset forms.
Understanding NFTs. What are they?
NFTs are cryptographic tokens that are linked to digital or token versions of physical content. As they are non-interchangeable, they also serve in providing proof of ownership for the content. Fungibility means that an asset’s units are interchangeable and indistinguishable from one another. Most currencies (including cryptocurrencies) for example, are interchangeable. A N1,000 note can be exchanged with any other genuine N1000 note or other denominations. This is imperative for an asset that aims to act as a medium of exchange. However, this does not apply to NFTs, which makes them unique. This is because no two NFTs are similar or divisible, which gives owners the original rights to an asset that cannot be replicated.
How do they work and why do we need them anyway?
The prices of NFTs depend on the demand and supply chain as there is no fixed value. NFT prices are determined by the value placed on them by people – buyers and sellers. This phenomenon is not strange as it already works for collectibles and art pieces. It is also important to understand that NFTs can’t be replicated or transferred without the owner’s permission– even by the issuer of the NFT.
NFTs are issued on different blockchains to regulate and standardize their issuance. For instance, Ethereum’s ERC-721 standard is the most popular blockchain, but there are others like Solana, NEO, Tezos, and so much more. Binance through its BNB Chain has its NFT standards, which are similar to the Ethereum standards but are more attractive for creators looking to mint NFTs at a cost substantially lower than Ethereum.
NFTs are gaining more momentum every day as money becomes less valuable. People are turning to newer ways to store wealth and the next viable alternative is blockchain, which is the future of the financial system. With NFTs, collectors can purchase digital assets stored in a blockchain and expect their value to increase in the future as a means of growing wealth and enjoying the freedom of money; and for artists and creators, it presents an opportunity to have access to a much wider market to sell content and artworks to collectors at a good value.
How can one buy or sell NFTs?
Marketplaces such as Binance, host a range of tokens and allow you to buy or sell NFTs. Binance NFT Marketplace allows artists, creators, and crypto enthusiasts to mint, sell and buy NFTs from creators around the world and take part in events where they can buy premium and exclusive NFTs created by influential names and brands. It also allows users to have access to mystery boxes that could offer a chance to win a normal (N), rare (R), super rare (SR), or super rare (SSR) NFT.
The NFT prices and currencies also depend on the blockchain they are hosted on; for instance, BNB Chain NFTs are usually in BNB while Ethereum NFTs use ether (ETH). Both cryptocurrencies are available to buy on the Binance exchange and can be purchased to buy NFTs. The platform also has multi-chain support that lets users easily transfer their NFTs to and from BNB Chain and ETH networks.
With a projected growth of $35 billion in net sales volume, NFTs are the next big thing in the world of decentralized finance and are offering a way for creators and collectors to diversify their income by selling and trading in valuable collectibles. To get started on your journey, you can take the following steps:
