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Understanding NFTs and Cryptocurrency

Understanding NFTs and Cryptocurrency

NFTs are digital assets that represent objects that you’d typically find in the physical world like music, art, videos, and in-game items. You have the opportunity to buy and sell them online using cryptocurrencies and, generally, they tend to be encoded using the same underlying software that you’d find with most cryptocurrencies.

Like the growing demand for online casino platforms, NFTs are becoming increasingly popular since people can buy and sell virtual artwork using tokens. They remain unique and limited in access thanks to their unique identifying codes creating digital scarcity in the process. Since NFTs allow buyers to have ownership over the original item, buyers can be offered built-in authentication that will serve as proof of ownership which is certainly something to brag about for collectors.

NFTs Vs Cryptocurrency: What’s The Difference?

NFTs, also known as Non-Fungible Tokens, are created using the same kind of programming that’s used on cryptocurrencies and that’s the only similarity that exists between them.

In terms of differences, cryptocurrencies fall within the group of fungible assets which also include fiat currencies. This means that they can be exchanged or traded between one another and they’re also equal in value where you’ll find one Bitcoin being equal to another Bitcoin and one dollar always being equal to one dollar. This makes these fungible assets trustworthy when it comes to facilitating transactions on blockchains.

On the other hand, NFTs are a little different. Each token has a unique digital signature making it impossible for them to be exchanged even between one another. This is why they are regarded as non-fungible. They also exist on a blockchain that is visible on a public ledger that’s responsible for recording transactions.

Typically speaking, NFTs are usually held on Ethereum blockchains even though it does have the support of other blockchains. An NFT is made from virtual objects that represent intangible and tangible items like videos, GIFs, art, sports highlights, collectibles, designer sneakers, virtual avatars, music, and even tweets.

What NFTs Are Used For

NFTs make it possible for content creators and artists to monetize their wares meaning that artists no longer need to primarily rely on auctions, events, or galleries to create sales on their art and content. Also, they can factor in royalties to receive a percentage of revenue each time their art and content are sold making it an attractive feature for artists.

Buying NFTs: How To Go About It

To begin collecting NFTs, there are some key items that you would need to acquire. These include a digital wallet to store the cryptocurrency and NFT, and possibly needing to purchase cryptocurrencies to facilitate the transaction. The process should be straightforward to do, but be sure to keep fees in mind as most platforms charge transaction fees when you purchase cryptocurrencies.

NFT Marketplaces

After setting up your wallet and funding it, you’re now ready to start shopping for NFTs. Even though these marketplaces host thousands of NFT collectors and creators, it’s still important that you do your research before making a transaction. Presently, the largest and most reliable NFT marketplaces are:

  • OpenSea.io
  • Rarible
  • Foundation

Are NFTs Worth Considering?

There aren’t any strict requirements or stretching processes that go into purchasing NFTs, however, they are risky to invest in. Their future is uncertain and not enough history can be collected on them to say if they are worth investing in even if you’re considering starting with a small amount. So if you choose to invest in these tokens, it would be based on your own personal decision.

The value of an NFT is solely based on how much the buyer is willing to pay for it. For this reason, demand will increase the price of the token rather than increase the economic, fundamental, and technical indicators. Typically, this will influence the stock price of the item forming the basis for investor demands. So, it is possible to resell your NFT for a price that’s less than what you had initially bought it for. It’s even possible to find cases where no one would be willing to buy it at all as well which can be an incredible loss to you.

In essence, approach NFT purchases like any other typical investment. Be sure to do your research, make an effort to understand the task at hand, be ready for any losses, and should you choose to pursue the investment, do so with a healthy dose of caution.

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