5 interesting things you should know about NFTs

NFTs have been recently gaining a lot of popularity. People of different classes are taking an interest in them. Non-Fungible Tokens, or NFTs, are a new type of digital asset that is not interchangeable with other tokens. NFT is a new form of digital art that can be traded like any other cryptocurrency. It is an acronym for Non-Fungible Token. Unlike traditional cryptocurrencies, these tokens are not fungible meaning they have their own identities, histories and ownership.

These are unique digital assets that are stored on a blockchain. They can be used as a form of currency, or they can represent ownership of an asset, such as a piece of art. NFTs are not limited to artwork; they can also represent anything that has value, such as music and other forms of intellectual property. This is because, unlike physical goods which have intrinsic value, digital goods like music and art are only worth something because the owner assigns them worth through the transaction process. 

These are often used in gaming to represent items, such as weapons or armour. They are also used in the digital art world to describe pieces of art that cannot be copied and pasted. In the music industry, they can be used to represent ownership of a song or album. One of the most common uses of them is seen in video games and blockchain projects. One thing you can forget is unlike traditional cryptocurrencies like Bitcoin and Ethereum, these tokens are not fungible and have different properties.

Although most people do know about NFTs they are not sure where to purchase them. Well if you are an enthusiast interested in exploring NFTs then check out the NFT marketplace. These marketplaces do have varieties of NFTs on sale, you can find work from famous and up-and-coming artists. Some of the biggest marketplaces include OpenSea, Treasureland, etc. Since the demand for NFTs is rising make sure that the marketplace is genuine before you dip your toes.

If you are curious about NFTs and want to learn everything about them then check out this article. In this article, we will discuss other interesting things you should know about NFTs. What are you waiting for? Then let’s jump into the article then.

NFT – a cloud storage

There are many ways people describe NFTs, however, one thing that these tokens do is store information like a cloud storage provider. All the information that is stored in the tokens is the visual representation of the data. cool, right? Token also consists of metadata like collection properties. In theory, a user can store any file like music, art, ebooks, etc as an NFT. 

NFTs can be staked as collateral for loans

Yes! No bluff the NFTs can be stacked as collaterals for a loan. There are many platforms on the internet that make this a possibility. This concept is popularly known as decentralized finance allows people to carry out p2p loans through a third-party protocol. The protocol values the price of NFTs and users can take loans against the liquidity of the token. However, if the price of the token goes down then they take the NFT as collateral. You can also stake your collaterals in certain protocols and earn good interest in them.

NFTs can be affordable

Most people have a misconception that the price of NFTs is astronomical. Well! There are pieces of art, music, fashion, and sports items that are highly costly. Simply put, limited edition or rare items do cost a lot, don’t you agree? However, this doesn’t mean there aren’t things that an average investor cannot afford. There are chains like the Ethereum layer 2s and Solana that have low transaction fees allowing investors to try. If you are a newcomer that wants to enter the NFTs space make sure that you do your research and understand the market thoroughly before you jump.

Used as in-game assets

Metaverse has become a common term and most people have associated it with the virtual reality of the real world. From clothes to their avatar to digital land plots, people do want to own a part of the metaverse. The users can create their avatars based on their interests and then explore the world around them. Yes, from buying to building, they can do everything in the real world. The blockchain games are the elevated version of the metaverse and the characters or heroes in these games are the NFTs that can level up or you can send them to quests, earn items, etc. These earned items can be used or sold in the game.

Not all the NFTs are on Ethereum

Yes! You have to get this straight, not all the NFTs are on Ethereum. They pretty much exist in all blockchains, however, the formats may differ although the basic principle remains the same. Another thing that you must know about NFTs is that these chains use a different kind of proof of stake consensus mechanism to secure the chain. They are present on many other chains outside of the Ethereum chains like Tezos, etc.

In a nutshell,

Crypto was gaining a lot of attention and it has put blockchain in limelight. NFT is also a block-chain based token that represents digital assets like music, art, clothes, etc. However, one thing that differentiates NFTs from Cryptos is that they cannot be exchanged, the users can only use them to purchase.

Since its inception in 2017, NFTs have been gaining a lot of popularity. New developments about them have been constantly coming out. So in the future, we will get to see more developments of these tokens. As an investor, if you are interested in investing in them then it is highly recommended to make sure that you understand these tokens and their market before you take a decision. As you have made it to the end of this article, we hope you have gained a lot of knowledge about NFTs. For more such interesting articles check out the zeen website.

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