When it comes to the world of crypto and all the phrases that are tossed around in it, the one that you have probably wondered the most about is the NFT one, as it is certainly the most used one apart from words like blockchain, crypto wallet, seed phrase, moons, and a few other ones.
You might have tried to Google the meaning and explanation for it, and you have either landed here on your first try looking for a simple explanation that will not take your half-an-hour to read, or you have spent a while on Google finding useless explanations that inevitably wasted your time. Without further ado, let’s get word NFT explained without too much confusion.
What is an NFT?
Non-fungible tokens or NFTs are unique cryptographic assets that are printed on a specific blockchain that they are related to. You have probably read this NFT meaning a couple of times already, but what does that mean? It basically states that they are like a signature of ownership of the thing that they represent.
The best example of looking at an NFT is to look at it like cards since they are non-fungible.
Wait, what is a fungible token to begin with?
A fungible token is something those values are interchangeable. If you would trade fungible tokens, you would know how much each is worth. It is like converting US Dollars into Euros, for example, the value of both is known.
With non-fungible items, the value cannot be really compared to anything else, as it is one of a kind, and its value can be determined by all kinds of factors. A non-fungible item could technically be that monstrosity of plasticine that you stuck together when you were a child. To some, it could be worthless, but it could be worth a lot to you due to sentimental value.
Of course, when the word is about modern NFTs in the crypto universe, at the moment, the talk is not really about physical items, even if old historic items are probably the best and most common representation of an NFT. In the digital world, an NFT can represent anything, from music to images, gifs, videos…literally anything.
How are NFTs created?
NFTs are created by artists or license-holders through a process which is known as minting. This process involves signing a blockchain transaction that outlines the details of the token, and then it gets put on the blockchain to trigger a smart contract function that can prove its owner.
A smart contract is basically code that is executed deterministically on the blockchain network. They can store a small amount of data in common data structures, which is the critical component of identifying the owner of an NFT.
The first media that popularized NFTs is the game called Crypto Kitties, which is a game where people could collect and trade virtual kittens that were generated as NFTs on the Ethereum blockchain, and it was done all the way back in 2017. It is a surprise that it took a bit for NFTs to become as popular as they are today.
What is the point of NFTs?
The answer to this question is a bit tricky since it depends if you are asking it from the perspective of an artist, or a perspective of a collector. If you are asking as the ladder, the best way to look at buying and NFT is to consider it as having the bragging rights to owning the NFT, supporting the artist you are buying it from, and of course, being able to use the image online without any issues.
As a seller, NFTs are a great way for you to sell your work that might not actually have a market. You can sell stickers, digital art, or perhaps even some sound effects as an NFT. If you are a seller, the feature of getting a percentage each time a transaction with your NFT is done can be quite useful if your work becomes popular, just some friendly advice.
So..are NFTs technically useless?
Again, it is a bit tricky to explain, because it really depends on the type of NFT. It depends on what are NFs and how does NFTs work. For example, if someone posts a picture of themselves on the NFT marketplace and wants to sell it for $1000, it does not seem too tempting, but if the NFT is something that you can use in a game for esports crypto events, then it might be worth your time.
With NFTs meaning changing, they have been able to become more and more useful as time goes on. Businesses have utilized NFTs for business growth and musicians have been able to release their music for fans to enjoy.
Overall it is clear that NFTs are useful if used in the correct context and shouldn’t be underestimated!
What are NFTs and how do they work in NFT Games
The best example for NFTs that actually have some kind of utility behind them are ones that are used in games. Do not get us wrong, owning some rare NFTs that people would pay big bucks for in order to get them in your crypto wallet as original owners are probably worth having or owning, but the ones with practical use are the ones always worth checking out.
Axie Infinity is one of the most popular NFT games out there. It is also a play-to-earn game, which increases the reason behind its popularity. You can learn more about P2E NFT games or the P2E meaning in our hyperlinked texts if you are not sure what this is.
In this game, each Axie (monster in the game that a player can have on their account) is an NFT. These NFTs are used to create a team and fight other players on a ranked competitive ladder. So how NFT work in this game is that every monster has its own stats and effects, which is what makes the game interesting, as each team is more or less unique (as certain NFTs do have very slight differences).
© Axie Infinity
Can you store an NFT on every wallet?
The most common mistake when it comes to NFTs is that a lot of people consider them just a bunch of cryptocurrencies bundled together, which would naturally make it viable on all crypto wallets. However, it is a bit more complicated than that, which is why you should look if your wallet supports the storage of NFTs in their NFT form. In some cases, you might lose the NFT forever if you attempt to transfer it to a wallet that does not support it.
There are a number of hardware wallets you can store your NFTs on. Doing so allows you to keep them safe. Ledger is one of the most popular. If you are unsure of what they are make note of these points from their site:
- Ledger devices are hardware crypto wallets that store your private keys offline.
- Ledger is a three-part system consisting of a hardware device, the Ledger Live app, and a platform of integrated dApps that evolve as Web 3 grows.
- Ledger’s ecosystem provides absolute security against hacks for your private keys, ease of use for managing your assets, and transparency when signing transactions.
- In a nutshell, Ledger offers a secure gateway for exploring Web3 and learning about the self-custody of your crypto assets.
It is no wonder there have been no recorded hacks on Ledger making it an incredibly safe option. You are given a 24 recovery passphrase. When given this you must make sure to hold onto it. If you lose access to the pass code you cannot regain entry.
The Final Verdict
The final verdict from us is that NFTs in crypto gaming and beyond are worth your time. Whilst it is good to have a non-biased take, a lot of evidence has proven that NFTs are a cool concept ready to take gaming and the entertainment industry by storm in the coming years.
Always do your homework on Web3 related investments as they are always deemed a risky investment.
FAQ
What are the benefits of Non fungible tokens?
– NFTs have proven a great investment for those that time markets or get in on a lucrative Web3 project early. Like many investments, there is a lot of risk involved which ultimately puts your capital at risk. However, it is worth giving it a go once you understand how NFT work and what the point of NFTs are.
– You can earn rewards in Web3 ecosystems and enhance your experience. If you are unsure what we mean, then a good reference is crypto games. Buying an NFT brings value to your game, as many games based on crypto require NFTs. Once you have purchased an NFT, you gain more gameplay and may be able to earn crypto tokens of your own, exchangeable of course for money!
Is it safe for me to purchase NFTs?
Also ensuring you have purchased from a reputable exchange like Binance, OpenSea and Magic Eden gives you security when buying NFTs. If you are unsure, just simply search the marketplace’s full URL as there are many phishing scams online around NFTs and crypto.
Find out here the Best Crypto Wallets for Gaming
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