What Is an NFT? How Does NFT Work?

NFTs are cryptographic assets with unique identification codes and metadata, allowing them to be distinguishable from each other
Minting is the process when one integrates digital content or art in a blockchain

Non-fungible tokens (NFT) are digital assets based on blockchain technology. They are cryptographic assets with unique identification codes and metadata allowing them to be distinguishable from each other. NFTs are items used to represent ownership of unique items . Examples of NFTs include Gucci Ghost, The First 5000 days , Nike, Tacco Bell, Nyan cat, Overpriced Hoodie, Bored Ape Yacht (BAYC).

The unique identity of an NFT is verifiable through the blockchain ledger. NFTs mostly come with a license to the digital asset it points to but this does not automatically confer with the ownership.

The safest way to buy or sell an NFT is in an NFT marketplace. OpenSea is the leading market place when it comes to NFT sales. OpenSea supports more than 150 payment tokens. The marketplace supports artists and creators that want to mint their NFTs.

Another marketplace is Larvalabs, it is best known for Cryptopunks NFT projects. Larva labs offers other digital art projects that are Ethereum blockchain based. Rarible is also another marketplace that is almost similar to OpenSea. Rarible is built on the Ethereum blockchain.

What deos it mean to mint an NFT?

Minting is the process of integrating digital content or art in a blockchain. Examples of blockchains that support minting include Polkadot , WAX ,Tezos , Cosmos the list is endless. Minting an NFT converts the content into a digital asset that can be purchased and sold using cryptocurrencies in NTF marketplaces.

Some of the fees that one is charged when minting include : Gas fees- this is a fee on the transactions made on the network for minting operations. Account fees- this fee is charged depending on the market place that one uses to mint the NFTs, Listing fee- this is the fee that one incurs for your NFT to be listed in any marketplace.

How do NFTs and crytocurrency connect?

One use case of NFTs in crypto are the cryptokitties launched in 2017. Like cryptocurrencies NFTs exist on a blockchain as cryptographic assets. Most NFTs are linked to the Ethereum Blockchain.

Ethereum is a crytocurrency like Bitcoin but its blockchain keeps track of whose buying or holding an NFT. The worth of a token comes from the users shared agreement. The community that one builds around the NFTs creates the underlying value of the tokens .

The top five NFTs by value are:

1.The Merge ($98.1 million)

2. Everydays : The first 5000 days($69.3 million)

3. Human one ($28.9 million)

4. Cryptopunk #7523 ($11.75 million)

5. Cryptopunk #3100 ($7.67 million)

NFT are available in marketplaces where it is required to use a blockchain specific token. An example, buying an NFT from OpenSea that is a member of the Ethereum network will require Ethereums Fungible WETH Token where buying NFTs on Decentraland will need it native fungible token MANA. WETH and MANA are tokens used to purchase NFTs.

NFTs can increase and decrease in value depending on the social hype around it, not all NFTs are designed to make you money. Some are simply created for charity and some NFTs are not that valuable. Millenials appear to be buying NFTs while Gen z and Gen x are coming in close by.