NFT Course – Overview

    What is a Non-Fungible Token (NFT)?

    NFT stands for non-fungible tokens that are created by using the similar type of programming used for cryptocurrencies. NFTs are cryptographic tokens, and they exist on the blockchain. Because of their uniqueness, they are digital assets that cannot be “replaced” (they are non-fungible). 

    Non-physical certificates of authenticity can purchase real-world articles like artwork or real estate codes that are not changeable. The tangible assets can be exchanged through these tokens, and buying, selling, and trading them become more transparent, evading the chances of fraud. They are now used to represent property rights, individual identities, and much more.

    Non-Fungible Token Protocols

    NFT protocol is a decentralized trading organizational structure to support the non-fungible tokens. They are made to take care of all the requirements of the NFTs. It works on the principles of collaboration and takes input from the community, NFT participants, and others who prefer NFTs.

    The decentralized exchange for NFTs is ‘The DEX’ on Ethereum (crypto platform). Polygon is the first product powered by NFT Protocol and is built by the NFT developer team. NFTs can be safely exchanged with other assets through the DEX. It supports the ERC 721, ERC 1155, ERC 20 token standards, and ETH/MATIC. Creation and filing of a 1:1 or multi-asset swap are allowed by the DEX consisting of any combination and quality of the assets it supports.

    Why are non-fungible tokens so popular right now?

    Non-fungible tokens are a new class of assets and are one of the hottest topics discussed worldwide. By non-fungible, it means that none of the tokens are similar. Each one is unique and cannot be replaced with each other. For example, in the case of the CryptoDino collection on the Cardano Blockchain, each of the tokens is unique though it happens to be a collection of ten thousand graphics of little dinosaurs.

    It is impossible to make a copy of any of them by taking screenshots etc. The unique token ID and the related policy are there for each one of them available on the blockchain. These policy IDs are certified for their authenticity and originality. The reason for their popularity is that the assets created digitally represent ownership of these tangible assets.

    Is It a Bubble?

    Until recently, NFTs were not in trend. The valuations and prices are not worthwhile according to many people. Beeple’s “The First 5000 days” was sold for 69.3 million pounds. It is a collage of work by the artist Beeple. The certificates of ownership for digital work won’t sustain for long. A few say the bubble is about to burst, and this sector might incur huge losses. 

    The sudden hype and interest it has garnered bring doubts about its credibility as a good asset class. It does not look good from a long-term perspective without understanding its functioning and the value it derives from digital assets. A few experts believe that it can start anytime. 

    The average trading value is coming down, and one of the biggest names in this asset class, the Bored Ape Yacht Club, incurred losses earlier this year. It could be due to the shift by investors from NFTs to other classes of assets. However, it is considered a risky investment. Using them just for making money is not advisable, at least yet.

    What are the different types of non-fungible tokens?

    Depending upon their unique features, a non-fungible token can be put under different categories:
    types of nft
    Avatars/PFPs-These NFTs are used as profile pictures or online identities. In one collection, there can be thousands of avatars. Their traits determine their uniqueness. Examples are:

    • CryptoPunks
    • Bored Apes
    • Lazy Lions

    Digital Artwork NFTs-It all started with digital artwork. These types of NFTs are the most popular. They can include anything like paintings and drawings, photographs, etc. 

    Music NFTs-Artists use music NFTs to get rid of piracy and other intermediaries to reach their audiences directly. The artists confirm that they have earned more through NFTs than by any other means. 

    Video clips and GIFs-It is nothing but a motion version of the paintings and drawings turned into video clips and GIFs. They could be memorable moments from sports, movies, or behind-the-scenes clips. LeBron James’s “Kobe Bryant Tribute Dunk” was sold at a high price. 

    Memes- Memes have a different category altogether.  Bad Luck Brian, Charlie Bit My Finger, Disaster Girl, etc., are the famous memes of NFTs. 

    Video Game NFTs-The players can buy, collect and trade in NFTs. They are in the form of virtual weapons, characters, skins, creators, and in-game accessories. Axis, which looks like Pokemon from the game Axie-Infinity, gained popularity in 2021. 

    Trading Card NFTs-This kinds of NFTs are nothing but the digital version of traditional collectible cards. The players can trade them with others or just as collectibles. Sorare cards are one such collectable. 

    Metaverse Land- It can be the most sustainable NFT model and lets users interact with the virtual ecosystem. In their own virtual real estate, they can buy, sell, or trade. The Sandbox and Decentraland are quite famous NFTs under this category.

    Virtual Fashion- Virtual wardrobe is needed for virtual online identities. Sunglasses, sneakers, hoodies, new skins, and other customized accessories for an avatar are in demand. Ralph Lauren and Balenciaga have their own fashion NFTs.

    How do you buy non-fungible tokens?

    Follow the below-mentioned steps to buy NFTs

    1. Buy Ethereum- NFTs are mainly based on Ethereum, so most marketplaces accept them as payment. Open a cryptocurrency exchange account, purchase Ethereum, and send crypto to MetaMask Wallet. You can alternatively use Coinbase and e Toro.

    2. Connect MetaMask to OpenSea or any other NFT Marketplace- WazirX, Jupiter Meta, Bollycoin, BeyondLife, BuyUCoin, etc. are the best kind of Marketplace in India for NFTs. You can choose any of them. But it will affect the type of art or collectibles you want to purchase, so choose accordingly. They operate with a few differences, but the mechanism is the same. Ledger, SuperRare, Nifty Gateway, NBA Top Shot, etc., are the other popular markets. 

    3. Buy NFT-You can now buy an NFT. The markets are in an auction format, and you can place your bid to buy the NFT you want. If you buy from the primary marketplace, they can be put for resale for 5-10 times their original price following their release. But to fix a demand for an art piece is also problematic in the primary markets.

    How do you store non-fungible tokens?

    The security of NFTs is essential. You cannot leave them in a marketplace or an exchange as they can be possibly hacked. Because it is based on blockchains, the storage is decentralized and completely secure. Store them in the following manner:

    • Do not keep them in your e-wallet. Through a private key, the wallets allow access to investments. If you store them online, they are susceptible to hacks.

    • Save them offline, like in cold storage where they are connected to the internet. Unauthorized access and cyber-attacks cannot affect them.

    • Take your privacy seriously and avoid hackers. The storage should be compatible across the different chains and with the marketplace to carry out buy/sell transactions. 

    • The wallet must offer security and also be user-friendly. 

    • Most NFTs are Ethereum based, so the wallet should be compatible with the Eth to store nft