NFT - all you ever wanted to know

What is NFT? NFT (it stands for Non-Fungible Tokens, by thew) is a part of blockchain technology. Although it has only been around for a short time, it is rapidly gaining popularity. New projects and creators are popping up every day. Read on to learn about the phenomenon of NFT's popularity, its history, security and how it differs from cryptocurrency and fiat money.

History of NFT creation

The NFT technology was created in 2017 on the basis of Ethereum smart contracts. As for the first asset, it was a 2007 work by Banksy called "Morons". The blockchain company Injective Protocol bought it, burned it and thus created the first NFT token.It's worth noting that it's not just artistic items that are sold as non-replaceable tokens. Even a popular meme can find a new owner. The Nyan Cat, for example, sold for nearly $600,000.

What types of NFTs are there?

There are plenty of them. So many that your psyche may be on the verge of collapse. We're joking, of course. But these tokens can be almost anything - from ordinary images to music and even domains.We suggest you take a closer look at the NFT options.

Artworks

Just plain old digital paintings or drawings. Mostly two-dimensional.

PFP

PFP or Picture for Proof is a kind of analogue to userpics. They are usually three dimensional and are used to verify this or that user profile.

Music

Music, actually. This can include full compositions as well as some short ambient tracks. Albums and even videos can be included in this category. Well, yes, they can also be tokenized.

Domains

You won't believe it, but even a domain can become an NFT. "How is that possible?" - is what you are probably thinking. Well, domain name providers on the blockchain offer such services for huge sums of money.

For example, Unstoppable Domains sold an NFT domain "win.crypto" for $100,000. This is the highest price ever registered under the NFT.

Games

The interactions in these games take place through NFT. Characters, accessories, artefacts are all in the form of tokens and the player is the real owner of these game items. Later, all this can be sold on marketplaces and earn real money.

Virtual property

This is closely related to games. This type of asset is most often found in them. Data stored on the blockchain is used to digitally map virtual land. Smart contracts guarantee the right to own this land for life.

Are NFTs safe?

They are, but there are nuances. For example, because NFTs are very similar to cryptocurrency, they can be stolen. There are also risks associated with buying non-replaceable tokens. For example, you could end up with an illegitimate copy. Or counterfeit, to put it more humanely.What exactly is blockchain and how does it relate to NFTs? We've mentioned several times that NFTs are inextricably linked to blockchain. But how? Well, let's have a look.First of all, let's understand the terminology. Blockchain is a type of database from which it is almost impossible to remove data. Information is added over time in structures called blocks. Each block is built on top of the previous one and contains a piece of information related to the previous one. The NFT on the blockchain is represented as a record stored in these blocks. It is actually a token - just a unique one.

What are NFTs used for?

To collect, of course! Well, that's the first thing that comes to mind. But the original intent of NFTs is to be a blockchain-enabled equivalent of real assets.

In practice, NFTs allow you to buy and sell virtual objects: music, photos, drawings, even real paintings. But this is only relevant to the specific platforms on which the token resides.

Beyond the boundaries of those platforms, there are no copyrights, and it is still not regulated in any way.

How much do NFTs cost and how do I buy them?

This is a question we really, really want to answer. But we can't. The reason is that each project has assets with very different prices. Many of them cost almost nothing at the moment (don't get scared and don't close the article in a hurry, we'll explain this a bit below), but some of them can go up to several million dollars.For example, CryptoPunk number 6965 costs $1,54 million, and the legendary "Stay Free" by Snowden is worth more than $5 million and counting. The representative of the PleasrDAO company bought this asset later on. It contains excerpts from documents on the NSA's violation of US law - just think about it!

What are the benefits of NFT?

The most fundamental benefit is additional income for authors. The fact is that in the realities of the modern economy, it can be very, very difficult to enter new markets and find buyers, and it all becomes a one-off operation because the author gets nothing from the subsequent resale of the works.There are really many ways to make money with NFT, even if you do not know how to draw, write or code. For example, you can resell tokens, play crypto games, take part in free giveaways and raffles, and buy the first NFT project that comes out, sometimes earning serious money in the process.It's also about market development. The smart contracts at the heart of NFTs open up a lot of opportunities to use them in everyday life. The point is that NFTs can also be used for everyday tasks such as buying an apartment, clothes or even tickets for events. As a result, experts are predicting that the market will continue to evolve and that the possibilities for tokens will extend far beyond the crypto community.

So what are the prospects?

This is where it gets a bit tricky. Let's not deceive ourselves and say that in 2023 many NFT projects have simply been wiped out. If you look at dappGambl's research, you'll see that around 95% of NFT collections are now worth exactly nothing. Literally nothing - meaning 0 ETH.

And this can lead to the very uncomfortable thought that the market is on its way to death and there is no point in being an investor. But of course, it's not that simple.

The decline was inevitable. As with any new and immature market that experiences rapid growth. Now the natural correction and filtering of the market from weak one-day projects is gradually taking place.Experts believe that the truly interesting NFT projects (those with memorable artwork or cool mechanics, for example) will continue to hold their value and even increase in value over the next few years. We are talking about the 5% that have not collapsed by 2023.

Examples of NFTs

Among the actual NFTs in 2023, the following projects can be highlighted.

Entities Meta

This is a contemporary collection by Russian artist Vasily Popov. It is attractive because it grows extremely fast. Buying an NFT also gives you access to the artist's private events, including a $100 million lottery.

BAYC

A true classic. Yes, it's no longer the most popular collection, but its daily turnover on OpenSea is over a billion US dollars and growing. It's just an interesting example, but we don't recommend joining this community right now, because many monkeys are just too expensive. The starting price is 33 ETH. If you compare it to what it was at the beginning (which is only 0.2 ETH!), it's a bit of a shame, don't you think?By the way, BAYC is one of the 5% of NFTs that are still afloat. Just bear that in mind.

WHALE

A very interesting candidate. Unfortunately, access to this community is limited. The developers themselves describe their brainchild as a universal club for digital technology enthusiasts, focused on the total immersion of its members in the revival of digital art and culture.Well, that sounds impressive. But we're moving on.

PixelBeast

Do you love pixels and 8-, 16-bit themes? Well, who doesn't.PixelBeasts is an exciting project that brings together newcomers and technology enthusiasts in the Web3 space. It offers a collection of 10,000 funny and cute creatures, each 24x24 pixels in size, with 41 unique beasts and 2 million possible combinations.

The Sandbox

We just couldn't not mention this giant. That would be sacrilege on our part. We can say that Sandbox is the Ethereum equivalent in the NFT world, with over 50 million installations. The company was founded in 2012 as a subsidiary of Animoca Brands, one of the leading investors in the Web3 space, and is based in Singapore.

This is a very promising area in NFT and probably the best asset to own at the moment. In-game items are not allowed to simply depreciate in value, so this is a very stable option to invest in. NFTs are represented here in the form of land, which the player can buy and own outright.

NFT VS fiats

Obviously, this comparison is not that relevant, but it is necessary to see the bigger picture. We've already established the difference between NFTs and crypto-assets (remember, one is literally a digital currency and the other is a unique creative asset), but what's the difference between them and fiat currencies?Fiat currencies are characterized by:

• Mandatory existence of an issuing center with exclusive rights to issue money (the Federal Reserve).
• Unconditional inflation - the money supply increases while its purchasing power decreases.
• Ever-increasing operating costs associated with holding large amounts of cash.
• Rising transaction costs.

NFT, on the other hand, can be characterized as follows:

• Stored separately - cannot be added up, divided or sold in pieces.
• Secure sole ownership of a particular digital aspect.
• Absolute transparency and separation - these assets are not regulated by the government and the creation and sale of an item can be easily verified. This approach maximizes transparency and provides a high level of trust.

The above leads us to the conclusion that these are completely different fields, and comparing them does not make sense in most cases. By the way, you can buy non-fungible tokens with real money by converting them into cryptocurrency. It's a kind of triple unbreakable bond - a chain from which no one can be excluded.

FAQ

Are NFTs safe?

In general, yes, but you should still be careful about what you buy to avoid mishaps.

What are NFTs used for?

NFT allows you to buy and sell virtual objects: music, photos, paintings, drawings. In fact, the token confirms the ownership of an asset on the blockchain.

How are NFT and cryptocurrency related?

The connection is both superficial and deep. Superficial in that cryptocurrency is often used to make payments when buying or selling assets.Deep from the point of view that both assets, cryptocurrency and NFT, are stored on the blockchain. But unlike cryptocurrency, tokens have no intrinsic exchange value.

What does "non-fungible" mean?

Non-fungible is synonymous with unique. When NFT is meant, it means that it is not possible to find two tokens that are the same, nor is it possible to replace one with another.

What is the best way to make money with NFT?

There's no way to tell right away. If you have no skills in drawing, designing, creating music, etc., then the best option for you will be speculation. This means buying low and selling high. Or you can try your luck at various airdrops. These are such free giveaways. And if you are a creative person, you can try to mint your own tokens.