NFT: What is the technology that pays billions of dollars for the digital industry and how does it work?

NFT: What is the technology that pays billions of dollars for the digital industry and how does it work?

NFTs have become one of the biggest trends in the crypto world in 2021, with sales up 55% compared to 2020, reaching $ 250 million to $ 389 million. And you probably don’t understand what that means. While it also works in a virtual world, this type of investment, and it’s an investment, is not like buying Bitcoin, as you might think at first. In this article, we will explore what these NFTs are and how they work.

What are NFTs?

An acronym for NFT Non-fungus tokens, Or “non-fungible token”. These are tokens, that is, numeric codes including digital transfer registrations that verify the authenticity of their owners. In practice, they act as collectible items, which cannot be played, but are transferred. Unlike cryptocurrencies like Bitcoin and various utility tokens, NFTs are not interchangeable.

Non-Funcible: In economics, they are assets that cannot be exchanged without changing the unit price.

Non-fungible tokens represent certain and unique things, including “proven cards” and cannot be replaced. For example, one bitcoin is fungus – exchange one bitcoin for another and you get exactly the same thing. A single business card, however, is not a fungus. If you exchange it for a different card, you will get something completely different.

NFTs can be really digital, but many “hypes” revolve around the digital industry. They can represent virtually any type of item, real or obscure, including:

– Artistic work;
– Virtual items in video games, such as skins, digital coins, weapons and avatars;
– Song;
– Collectibles, such as digital cards;
– Tokenized real-world assets, branded racing horses and sneakers from real estate and cars;
– Virtual land;
– Video of iconic moments of sports.

The idea behind NFT is this: they are like a digital signature that converts any type of digital media – a GIF or JPEG, photo, video, message, audio file, etc. – In a non-fungible well.

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A non-fungible token confirms that a particular item is genuine. In this sense, if you buy something with NFT, you are sure that the file is unique. This is a completely unique key that confirms the authenticity of the file.

NFTs are designed to give you something that cannot be duplicated: ownership of the work (although the artist may still retain copyright and reproductive rights in the physical work). To understand, we can say that anyone can buy a Mona Lisa print, but only one person can own the original.

NFT transactions are done through a technology called blockchain

This relationship between data and quality is made possible by a technology called NFT perception BLockchain. It is a decentralized database that has become famous for being the basis of cryptocurrencies like Bitcoin and Etherium. It is a system where it is possible to track the receipt and transmission of certain types of information. All transactions are recorded in an official document that can be accessed by any user.

Given the decentralized nature of blockchain, there is a big gap in security that stored data is secure and tamper-proof, which, like cryptocurrency, encourages market emergencies in the vicinity of NFT. Basically, any digital item that the author or owner deems necessary to define their authorship can be linked to an NFT as a way to preserve its originality in anticipation of commercialization.

The core values ​​of the NFT are based on the belief in authenticity

Most NFTs are part of the blockchain Etherium. NFTs are stored in digital wallets (although it is important to note that the wallet must be exclusively NFT compliant).

How do NFTs work?

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Anyone can create an NFT, virtually everything in the digital environment can become an NFT. Converting your GIF or JPEG image to NFT is actually quite easy and does not require much knowledge about the cryptocurrency market.

Ethereum has the largest ecosystem of NFTs and its largest market is currently OpenSea.

Below, you can see a brief step-by-step guide on how to create an NFT:

1- Choose which blockchain will be used to issue your NFT. Currently, the most used blockchain for Ethereum.
2 – Consideration Etherium As chosen in this example, you will need: a) a network compatible wallet that supports ERC-721 tokens; B) About $ 50 to $ 100 in Ether (ETH)
3 – Consideration OpenSae As a selected marketplace, you create “packages” / collections for your NFT with names, logos and descriptions.

Each blockchain has its own non-fungible token standard, compatible digital wallet and marketplace

4 – Now you select the file, define the name and description, and determine which collection your NFT includes.
5 – There’s your first NFT.

However this creation There is no guarantee that NFT will have a market value for the item it is linked to. Due to having some value, this NFT will be released in the market, can be bought and sold. All of this is managed by Ethereum, which records every transaction through it Smart contract or smart contract.

In 2019, the Nike The blockchain system has been patented Cryptococcus, Where brands can verify the authenticity of sneakers through NFT. Another example was in February 2021, when the meme Nyan cat Sold for 90 590,000. If you type in Google Nyan Cat now, you will find several copies and versions of this meme. However, anyone who buys a meme gets the original file with the code which guarantees its originality and exclusivity. Despite proving that an item is genuine, the NFT does not guarantee that copies and variations of the item will not be disclosed. However, it does guarantee that a particular item is genuine, even if there are copies and variations available on the Internet.

If you are the creator of an NFT, there is also a feature that you can activate that will give you a percentage every time you sell an NFT or change hands, ensuring that if your work becomes super popular and the price increases. By the way, you will see the part. That advantage.

Several markets have sprung up around the NFT, allowing people to buy and sell. This includes OpenSea, Rarible, Nifty Gateway And much more. There are also games that allow you to keep NFT as an item. Players may have the opportunity to purchase a unique in-game weapon or something like a helmet or NFT.

Caution when investing in NFT

NFT does not protect against high volatility

To invest in NFT, it is important to understand that investment is subject to change High volatility in both games, for example, and the market. It is possible to make a lot of money in a short period of time, but such investments should be considered in the medium or long term. A cryptocurrency expert ExperienceAndre Franco, for example, advises that no one should hold more than 3% of their equity in these assets.

There are secrets Profit inequality. With the possibility of appreciation, a small portion is enough for investors to change their financial level. On the other hand, he does not risk the money needed for his wealth or basic things. A basic rule, including investing in cryptocurrencies. The difference here is that what you sell and receive is a single piece, where in a bitcoin transaction you will give and receive the same thing.

But we’ve seen big brands and celebrities like Marvel and Wayne Greetsky launch their own NFTs, which seems to be the target of more traditional collectors than crypto-enthusiasts. NFTs aren’t as “mainstream” as smartphones or Star Wars, but they seem to have, at least somewhat, some lasting power. Some investors believe that they appreciate the price, others argue that, at some point, the market will no longer see the price.

In addition, they provide space for artists who might not otherwise be so lucky to work and sell their works in the traditional way.

What makes it different from real-world collections is that you don’t have a real picture or a CD here, for example. Evaluation and undervaluation use the same terms of supply and demand in our real world, but we are talking about digitally unique files and records that way.

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