Impossible to miss today NFT phenomenon. There is no day you can avoid reading or seeing an article on the subject. We’ll tell you all about NFTs to find out what they are, whether you should invest, and how to do it.
The definition of NFT
An NFT is an acronym. It is an abbreviation of an English term meaning Non-fungible token. We could translate this acronym as a non-fungible token. Now, you’re probably not far ahead. We will therefore try to find out what is behind this story of non-fungible tokens.
If you are interested in cryptocurrencies, you have surely heard of this token story. For others and without going into too much technical detail, it is a unique and tamper-proof identifier. This makes it possible to guarantee the authenticity of said token and therefore of the digital artwork to which it is linked. Simply put, it’s a kind of digital certificate that stores:
- The signature of the work
- The author’s name
- The type of product
- The appointment
- A unique authentication code
To avoid any risk of fraud, this token is connected to a blockchain thus making it tamper-proof. Therefore, each NFT is unique. For those interested, the most used blockchain is Ethereum, although the Cardano blockchain is gaining momentum in this field.
Therefore, an NFT is a digital collectible. It can take all kinds of forms, whether it’s a video, audio, or image file. Finally, for your general knowledge, NFTs are nothing new, as the former was born in 2014. Admittedly, the latter has not been very successful.
Can we resell an NFT?
It’s important to go back to this notion of fungibility a little more precisely, because many think that once you’ve acquired the work in question, it’s impossible for you to resell it. Fortunately, this is obviously completely false.
As you would with the sale of an artwork, the certificate is first authenticated via the blockchain and then handed over to the other person. Here, however, everything happens in front of everyone’s eyes. So you can know who owned the work before you.
Of course, it’s not enough to just email the digital artwork to the person and copy it to a hard drive for it to change ownership. You must use an NFT exchange platform or wallet type key. As you may have understood, an NFT works and trades in exactly the same way as a cryptocurrency.
What are the benefits of NFTs for artists?
For an artist, whether creating physical or digital works, creating an NFT associated with that work ensures that it cannot be copied or imitated, since he has a unique certificate in his possession. Of course, nothing prevents an attacker from making a copy, but then it will be a worthless fake.
As a buyer, you can easily find out if the job you are offered is real and also who it belongs to. For what, just check the hash of the token.
How to create an NFT?
Whether you are an international artist or only known locally, it is possible to mint NFTs. There are two options available to you.
- The first is to create a smart contract on the Ethereum blockchain. You will need a wallet to store the certificate once it’s created and a site to generate the NFT. You can do this via the Binance site, for example. To avoid creating NFTs for anything and to avoid “overburdening” the blockchain, this creation is paid for.
- The second option is quite similar, since you just go to a marketplace that already sells digital collectibles. They usually offer an option to create your own markup.
Whichever option you choose, there’s the matter of price. It varies according to the traffic at the time of the mint. If you are interested in creating NFTs, we recommend creating them very early in the morning or very late in the evening. Also note that you can use the lazy mint, still called free coinage. The principle is a little different, given that an NFT is well done, but the creation costs are borne by the buyer and no longer by the artist.
Can an NFT be split?
As you can imagine, the price of an NFT is extremely variable depending on the artist. In 2021, artist Mike Winkelmann sold a work for $69.3 million. Good news, it is possible to split the NFT. You can then buy the NFT with multiple people. It is also possible (depending on your needs) to divide it equally or according to the percentage that each person has invested. It works the same way as a condominium building. You are then free to resell your shares to another person.
Why invest in NFTs?
As you understand, NFTs are neither more nor less than switch to the digital art market, with, in addition, an expansion of the possibilities and greater security for buyers and sellers. You can then invest in an NTF, as you would in a safe haven. The big advantage of NFTs is that there are still some great deals to be had for investors. Thereby, an NFT sold for $1,646 was resold a few years later for $23 million.
You can also, as an investor, speculate on works or artists. Indeed, as with cryptocurrencies, NFTs are very volatile. You can then buy an NFT, as you would when buying stocks on an exchange or cryptocurrencies. On the other hand, it is currently not possible to profit from CFDs and trade NFTs.