What’s the deal with NFT?
Why are people so crazy about NFT
What is a Non-Fungible Token??
Let’s break it and understand literally. Non-Fungible simply means Non-replaceable. You may remember how people use to collect stamps or some paintings or signatures as they were one of a kind, they were irreplaceable and that's what made them valuable.
Now Token can be analogous to the bidding at auctions. You must have seen some auctions if not in real life maybe in movies. There is some valuable asset and people bid for it with the placards which have numbers written on them, so if someone with a number 11 placard pays the highest price or is ready to pay the price set by the seller he/she/they get the asset.
Similar is the concept of Token in NFT, they facilitate collaboration across markets and allow more transparent, efficient, and fair interactions between market participants. The only difference is that it's Digital.
How does the transaction take place?
Well, this is where Blockchain technology comes into the picture. You are used to hearing Blockchain interchangeably with Bitcoin or Cryptocurrency. Now it should not be used interchangeably because Crypto is a digital currency and Bitcoin is one of the many but most famous and expensive cryptocurrencies.
Blockchain simply does what Banks and middlemen use to do during transactions. But it is like a Public record on the Internet that is connected to other transactions which eventually reduces the risk of fraud or any malpractices.
To buy or sell NFT, Ethereum which ranks after Bitcoin in value among so many cryptocurrencies is used. You cannot purchase NFT using Dollar, Rupee, Yen, etc.
The process to Buy, Sell, and Create NFT
There are N number of Platforms today to trade NFT. Some most used platforms as of 2021 are listed below:
- Opensea
- NiftyGateway
- Rarible
- Foundation
- SuperRare
Some environment-friendly platforms: (will explain in this article later)
- OneOf
- Palm
- Lazy Minting
- Side Chain
- Bridges
The UI (user interface) of most of these platforms is like ebay/Amazon and they are not complicated to use.
Categories to Buy, Sell, and Create:
- Art
- Domain Name
- Virtual World
- Trading Cards
- Collectables
- Sports
For example if you want to buy you click on digital asset of your choice and you will see the ethereum value. So to purchase you must first convert your currency into Ethereum (cryptocurrency) and then purchase or if you already have the crypto account connect it with the NFT platform.
If you want to sell something there are 2 ways:
- You buy something then sell it just like you trade shares
- You create something and sell it.
For 2nd option you can create anything which fits into the categories available on that platform. The size of your digital asset should be ≤100 MB (in most platforms but may differ). Create your digital asset and add description or detailed information.
You can sell at a fixed price or put it for bidding or even Bundle it with other creators.
As a seller/creator you need to pay some fee even though listing you Digital Assel on that platform is free.
- Platform Fee
- Gas fee : On the Ethereum blockchain, gas refers to the cost necessary to perform a transaction on the network.
For more detailed knowledge about gas fee check out — https://www.youtube.com/watch?v=Yh8cHUB-KoU
Some other feature on these platforms include Analysis of the NFT. You can see price history, fundamentals like traits of a particular NFT while purchasing or selling or comapring it, checking trends, etc.
Why would someone pay Million dollars for something which is accesible for free????????????????
Some examples of how much the below digital asset were sold may blow your mind:
- jpeg image for $69 Mn
- 1st Tweet on Twitter for around $3 Mn
- NBA selling little moments of Basketball game for Hundreds of Thousands of dollars.
- Cat Gif $600K
But all these things are available for free to see or even to download then why to pay such huge amount?
It is mostly because of “Human Psycology”. With changing technology, our mindset to value things is also changing.
Once human meet their basic needs they want to create value in things that have no inherent value. The value then turn into a Psycological hype, excitement around certain things. And thanks to technology all this is in a Digital form now.
Impact on Enviornment
NFT is all time high and so is carbon footprint. This is because the NFT transaction consume as much energy as a small country.
Example - An artist realised that to sell 5–6 NFT (in form of Digital Art) he consumed 2 years of electricity required by his studio in 10 sec. After realising this he stopped selling NFT’s.
There are activists and protests to urge people to use clean energy like hydropower, solar, wind energy platforms for cryto and NFT etc.
But is it that easy to use clean energy?
Why are’nt we using it often if we already know the technology?
Well I will write about this in one of my articles.
Conclusion:
Some say it’s a bubble, some say it’s future. I don’t know what it holds but one thing is for sure, that is CHANGE. Remember the Dot.com Bubble? People say it was because of the Internet but the real culprit was Human and Greed.
Even after Dot.com crisis IT companies were on Boom infact in much better way and the growth was exponential.
The same will happen now. NFT may be the future or not but the Technology, the Concept will change the way we live for sure.
Let me know in comments what all crazy stories you have heard about NFT…
