What are NFTs and what is blockchain technology?

So, NFTs. The talk of the town since a couple of months. Now, up to an extent it seems like NFTs are somewhat like bitcoin and cryptocurrency, but trust me, it’s not. Yes, it’s connected to cryptocurrency in some way but these are two different concepts. So, what are these?

Blockchain

Before we dive into NFTs, let’s discuss the system upon which it works, Blockchain technology. Now, what is blockchain?

Blockchain is a distributed database. Simply put, it’s a ‘chain’ of ‘blocks’ filled with some kind of information, shared across a network of computers. It’s like a ledger, where you enter some kind of information in the first ‘block’, once it’s filled, it adds a new ‘fresh block’ and then so on and all of these blocks form a chain. The goal of blockchain is to allow digital information to be recorded and shared, but not distributed. This means that the only way of inputting information into a blockchain is through automation, which can’t be altered by a human. Since the process is automatic, as soon as any transactions happen in the blockchain, a computer automatically records the transaction details such as the time of the transaction, the person behind the transaction in the blockchain and this can’t be altered by any other computer or the same computer itself, not even human beings.

Blockchain is widely used in the field of cryptocurrencies to record the crypto transactions so that while the transactions are being done, no one can have control over the transaction details to provide a safe and secure transaction experience. In the case of cryptos, transactions are irreversible and the records are viewable for anyone.

Okay, then what are NFTS?

Non-Fungible Tokens

Okay, non-fungible means ‘something which can’t be replaced. For example, Bitcoin is fungible, you can trade one for another. But non-fungibles can’t be replaced for something else and are unique. So, NFTs can be any sort of digital object. Say, for example, digital images you have, digital audio files, anything digital.

Remember these apes? Well, these are an NFT collection. When you buy an NFT, you are basically paying for the ownership of the object that you just bought. But that doesn’t mean you can use it anywhere you want. Of course, you can use it in your profile pictures but the credits have to be given to the artist. This means that even if you do buy and get the ownership of an NFT, you have to acknowledge the creator of the art.

And this is where blockchain comes to use. Blockchain is used to track the transactions happening for a particular NFT and to record who has the ownership of which NFT.

Is it good to invest in an NFT?

Well, there’s no concrete answer to it. But one thing’s for sure, that this is just a trend and isn’t here to stay (this will be used inside of Metaverse, yes.) and after a while, people will forget these. So, I wouldn’t really invest now given the circumstances but if you really want to, don’t put much money into it.

There are some disadvantages too:

• Inconsistent pricing of NFTs.
• When a particular NFT becomes popular, there are high chances the NFT is getting copied and there might be many similar-looking NFTs that might damage the authenticity of the NFT YOU own.
• MIGHT be a bit more complex for a normal person.

How do I buy NFTs?

So the largest market for NFTs is OpenSea. Well, I’m going to leave a link down below on how to buy NFTs (NOT A FINANCIAL ADVICE).

How to Buy Non-Fungible Tokens (NFTs) | The Motley Fool

There you have it, folks! Now you have a simple idea of what’s an NFT and all the things related to it!

Don't forget to leave comments on what you think will happen to NFTs in the future!

Hope you learned something new, and until next time, Adios!

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