NFT: What is it, and why is it so well-liked?

24 Nov. 2022

Recently, NFT has become popular. Many creative people create paintings, music, or other content. To confirm their rights to a particular digital asset, a non-interchangeable token was invented. Today, anyone can register an account on a special platform and add their work there. Copyright protection does not mean that no one will be able to get a copy of the image by taking a screenshot. Users can copy the image and save it to themselves, but the rights to the work will remain with the artist. Before using this technology, we will first find out what it is.


NFT token: what is it?

NFT (Non-Fungible Token) stands for non-interchangeable token. This is a record or certificate stored in the blockchain environment and used to confirm the rights to a digital asset. Anyone can keep a copy of the work; however, the owner will only be the one who has the NFT. Assume the original of any famous painting is in England and is housed in the Tate. This painting costs a lot of money; there are also reproductions that are made of very high quality, but only the original is of true value, since there are relevant documents for it and any expert will be able to verify its authenticity.

The same applies to NFT; the author can register his work and wait for the digital image to increase in price, and then sell it and get money for it. After that, the rights to the work will be transferred to the person who bought it. The cost of creating art can range from a few thousand dollars to several million dollars. It depends on the recognition of the seller's name and the uniqueness of the product. A simple GIF, for example, once sold for $ 600,000.

There is a difference between interchangeable and non-interchangeable assets. Interchangeable is when one item is equal to exactly the same item. Let's say a $100 banknote is equal to exactly the same banknote. In addition, any other currency will also be interchangeable, including cryptocurrency.

As for non-interchangeable objects, they have significant differences, and it is impossible to find an identical replacement. For example, diamonds that differ in a number of parameters (quality, color, cut, etc.) or a plot of land that will also differ from any other plot. The works of art of famous artists are also unique; they are also non-interchangeable.

What is an NFT painting?

The answer here is quite simple: it is a graphic image with a unique entry that is entered in the blockchain registry. A striking example here will be the collection of illustrations titled "The First 5000 Days" by artist Mike Winkelmann.

NFT in video games

Everyone who has played online games knows that you can buy items there with in-game currency or real money. Usually, when buying armor and weapons, these items are still the property of the company that created the game. NFT technology will allow you to change the rules. The purchased items will become the property of the player, which means that the user will be able to sell the found items outside of the game. Its unique history will add additional value to the artifact. For example, participation in legendary battles.

NFT, and how to make money on it?

There are several ways to make money on this trend on the Internet. Some people earn thousands and even millions, but this does not mean that everyone will be so lucky. Most famous people earn only on their own name, because art posted by a famous artist or singer sells faster than art posted by an unknown user. Therefore, when selling at the beginning, an adequate price should be set, and when the token is sold, the cost of the next NFT can be raised. Here are a few options for earning money:

1. Create your own file. You can create a picture or a sound file and then upload it to one of the popular sites.

2. Purchase and sale of ready-made works You don't need to have any creative skills here; you just buy a ready-made copy, for example, of an art picture and sell it at an inflated price.

3. Getting an NFT token for free in many games and NFT projects distribute tokens to users just like that. You can collect tokens for different projects and then resell them after a while.

4. Sale of in-game creatures. For example, in the game Axie Infinity, participants grow monsters. Due to the unusual mechanics, monsters are unique; they are endowed with characteristics depending on the genetic predispositions of the parents. Players face these monsters in online battles, improve them, and then sell them on the market for cryptocurrency.

When selling, there is a "royalty" in the marketplace; that is, you can set, for example, a 5% royalty and each time receive income from subsequent resales. Let's say you uploaded your work to one of the resources and set the price at $100. After a while, one of the users liked the image and purchased it, then resold it for $400. So that you will not be offended because of the lost profits, you can set royalties and receive a percentage every time you resell your work.


Commission on the sale of NFT

A commission of 2.5% is usually deducted when using the Etherium network for various operations such as cryptocurrency exchanges or the creation or purchase of an NFT. It is called "gas fee" or simply "gas." It is paid for when transferring ETH or buying an NFT token.


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