NFTs have created one more way for creators to sell and get huge benefits from their creations. It is definitely the Blockchain Technology that has joined the concepts of Cryptocurrencies and NFTs to create a new financial ecosystem. But it is astonishing how people have accepted the concept of NFTs readily and utilized it.
There’s a lot of hype surrounding Non-Fungible Tokens (NFTs) at the moment. But what exactly are NFTs and should you invest? This guide will help you understand what they are, how they work, and why you should be investing in NFTs.
What Is An NFT?
A Non-Fungible Token (NFT) is a one-of-a-kind data unit held on a Blockchain (a kind of Digital Ledger). Any type of Digital Assets can be turned into NFTs, like:
- Event tickets
- Music and media
- Virtual items
- Real-world assets
- Domain names
Although NFTs provide proof of ownership of assets, the digital files NFTs point towards can be freely copied or downloaded.
For example, a musician might post a song online for people to listen freely but it does not provide anybody the ownership rights of the song, and the music, lyrics, or beats of the song cannot be freely plagiarised until the musician sells the ownership rights.
The uploaded copy of the song on any platform is a digital representation of the original work (much like an NFT pointing to real work or collection), and it can be viewed or downloaded without the rights of being sold or reproduced.
How Do NFTs Work?
NFTs have become a real gamechanger, especially for artists!
Many famous personalities have joined this new industry and one of the recent ones is Johnny Depp with his art collection named ‘Never Fear Truth‘. NFTs do not carry any value themselves but the Digital Asset they represent does!
So, artists and corporations turn their Digital Assets into NFTs by executing Smart Contracts on the Blockchain. These Smart Contracts are nothing but codes that incorporate the guidelines regarding the primary sales and secondary of art or collectible.
After an NFT is created, the owner can auction it off on any NFT Marketplace. Anyone who holds the NFT has the ownership rights over the Digital Asset, the NFT points at.
Should I Invest In NFTs?
If you’re one of those people who do not want to get into NFTs just because of the hype, then below are some benefits of NFTs that may make you change your mind.
- Each NFT is unique, for instance, you would not compare a video clip of Micheal Jackson performing with the one where LeBron James is scoring in a game because although both the videos are significant, the content of the videos and their values are different, so goes on with their respective NFTs.
- NFT is held on the blockchain network, which is a digitally scarce resource that makes the certificate of ownership is known across different networks, verifying the owner of a Digital Asset.
- Non Fungible Tokens guarantee ownership of an asset.
How To Buy NFTs?
Find a suitable NFT marketplace to sell your NFT. Criteria that come into play while choosing an NFT Marketplace are:
- How does the NFT Market verify its users?
- How much and what kinds of fees the NFT Market applies. For instance, OpenSea allows creators to create NFTs for free, however, other platforms may or may not provide this kind of service. Makersplace computes royalties based on the rules of the platform on which the art was initially created. However, platforms like Foundation and SuperRare have fixed 10% royalty charges.
- What tokens does the Marketplace use?
- How many Wallets does the NFT Market support?
You will need a Cryptocurrency Wallet funded by the Cryptocurrency the NFT Marketplace allows. If you do not have a Cryptocurrency Wallet, then you create one and buy Cryptocurrency of your choice!
How To Sell NFTs?
You can collect NFTs and store them in a collection or sell them forward. These secondary sales could make you good money and also provide royalties to the original artists. Selling an NFT also costs fees, you can check the fees before choosing an NFT Marketplace to trade your NFTs.
Once the NFT is sold, the marketplace handles everything, from transferring the NFT to the buyer to transferring the crypto funds to your wallet (minus the marketplace charges, Blockchain fees, or more).
Investing in NFTs is not complicated at all, however, people often forget to plan for these financial assets which would solve most of the financial issues of Beneficiaries if the owner of the NFTs gets incapacitated or dies abruptly!
Solving the issue of “Who Gets Your Crypto And NFTs When You Die?” has already become a major concern, and it will only become more significant in the future. Just think about how much money your Crypto and NFTs could hold for future generations!
A Digital Estate Plan can help you get rid of all your worries related to all your Digital Assets. A good Digital Estate Plan with a platform like Clocr would ensure the security and smooth handover of all your Digital Assets (both personal and financial) to your Beneficiaries.