The buzz around NFTs since the start of 2021 will make anyone wonder what the so-called abbreviated word is. The craze for NFTs exploded on social media a few months ago, with several celebrities, such as Jay Z, Paris Hilton, Steve Aoki, Shawn Mendez, Kings of Leon, Eminem, and so forth selling thousands to millions of dollars worth of digital arts.
Are NFTs the new gold mine? What do they mean, and should the whole world be worried about the potential risks they pose? In this article, we will tell you all that there’s to know about NFTs.
What Are NFTs?
No doubt, there’s an NFT bubble. What’s happening in the world today is just a speck of what is about to happen in the ecosystem. NFTs are driving the new wave of digital asset adoption in an exciting way and have allowed creators to monetize their work, creating the kind of demand that was non-existent. They have exposed the creative side of cryptocurrencies that is fun and readily accessible to all. Before we proceed further, let’s tell you what NFTs mean.
NFTs or Non-fungible tokens represent scarce digital artworks. These digital artworks could be a game, memes, music, video, a painting, etc. Many people and companies are capitalizing on NFTs to make money that would have been difficult to make on a normal day. Dapper Labs, the first company to popularize NFTs have made hundreds of millions of dollars from its CryptoKitties game and selling collectibles. NBA Top Shot, one of the products of Dapper Labs and NBA has sold over a $100M of magic moments in a year.
NFTs are created to give you something that can’t be replicated or replaced with something else, thus the meaning of non-fungible. NFTs aren’t expensive. They are different from cryptocurrencies in that in crypto, you can trade bitcoin for another, and you’ll have the same thing. It can be replicated or reproduced, but non-fungible items are unique. It’s demand and the eagerness to invest in the artworks that drive the prices.
How Do NFTs Work and Where Can You Buy One?
NFTs are minted on the Ethereum blockchain, which stores information about every transaction pertaining to NFTs. NFTs also store information, and that makes it even more unique than typical digital assets. The extra information stored can take the form of music, video in the form of GIFs and others. These tokens hold value, and like I said, the value of NFTs is determined by demand.
That’s not to say that there’s only one digital version of an NFT. There are copies of the original artwork in the blockchain, but they are not as valuable as the original.
The interesting truth is everyone can mint an NFT and put it on marketplaces. However, you need to set up a wallet, and you need to have some money down for gas fees and putting the token up for sale on those marketplaces. These fees can fluctuate at any time, so do proper research before going to any platform.
If you are wondering where NFTs are bought and sold, they are traded on several platforms known as marketplaces. In these places, you will find thousands of digital artworks auctioned, and with the right price, you could own one. Popular platforms where you can purchase NFTs are; OpenSea, Nifty Gateway, Rarible, NFT ShowRoom, Foundation, etc.
Are NFTs Environmentally Safe?
While the NFT space is a haven to make millions, these tokens take a chunk of energy during the production process. One piece of NFT can consume as high as 200kWh, equivalent to the entire energy used up by a neighborhood in two weeks. The carbon emissions are excessive, and this tends to affect climate. When you also consider that minting cryptocurrencies utilize a huge amount of energy that’s equal to that used by a country, you would begin to question yourself if these things are worth it in the first place.
Luckily, some countries and organizations have stepped up to improve climate by adopting alternative greener energies. This may take time to achieve, but it’s very possible to have a better climate and mitigate the impact of minting NFTs and cryptocurrencies.
NFTs were created to give control back to the artists and improve digital ownership. In the past, several digital contents have been released without the creator earning from them. NFTs have re-defined digital arts and are here to stay.