What Are Crypto NFTs? Here's the full explanation

If you are still a beginner in the cryptocurrency world, surely you will ask what is nft crypto? Now, VCGamers has provided a complete explanation in this article.

Non-fungible tokens (NFT) seem to be everywhere these days. From art to music, these digital assets sell like exotic 17th-century Dutch tulips. Some of them cost millions of dollars. Then, What is nft crypto? Why is it so expensive?

But are NFTs worth the hefty price tag? Some experts say they're a bubble ready to pop, like the gold craze or Beanie Babies. Others believe NFTs are here to stay, and they will change investing forever.

What Are Crypto NFTs?

What is nft crypto be a common question and beginners who are new to the world of crypto. NFTs are digital assets that represent real-world objects such as art, music, in-game items and videos.

They are bought and sold online, often with cryptocurrencies, and they are generally encoded with the same underlying software as many cryptos.

Although they have been around since 2014, NFTs are now gaining prominence as they are becoming an increasingly popular way to buy and sell digital art. The market for NFTs is worth a staggering $41 billion in 2021 alone, an amount that is close to the total value of the entire global fine arts market.

NFTs are also generally one of a kind, or at least one of a very limited number of processes, and have a unique identifier. “Basically, NFTs create digital scarcity,” said Arry Yu, chairman of the Washington Cascadia Blockchain Technology Industry Association Council and managing director of Yellow Umbrella Ventures.

This is in stark contrast to most digital creations, which are almost always unlimited in supply. Hypothetically, cutting supply should increase the value of a certain asset, assuming it's in demand.

But many NFTs, at least in these early days, have been digital creations that already exist in some form elsewhere, such as iconic video clips from NBA games or securitized versions of digital art already circulating on Instagram.

Acclaimed digital artist Mike Winkelmann, better known as “Beeple,” created a combined 5,000 daily images to create 2021's most high-profile NFT, “EVERYDAYS: The First 5000 Days,” which sold at Christie's for a record-breaking $69.3 million.

Anyone can view individual pictures or even entire picture collages online for free. So why are people willing to spend millions of dollars on something they can easily screenshot or download?

Because NFT allows the buyer to own the original item. Not only that, it contains built-in authentication, which serves as proof of ownership. Collectors value those “digital bragging rights” almost more than the item itself.

Difference between NFT and Cryptocurrency

NFT stands for non-fungible token. These are generally built using the same kind of programming as cryptocurrencies, such as Bitcoin or Ethereum, but that's where the similarities end.

Physical money and cryptocurrencies are “fungibles”, meaning they can be traded or exchanged for one another. They are also equal in value—a dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. The fungibility of Crypto makes it a trusted means of carrying out transactions on the blockchain.

NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged or equal to each other (hence, non-fungible).

One NBA Top Shot clip, for example, isn't the same as EVERY DAY simply because they're both NFTs. (One NBA Top Shot clip isn't even necessarily the same as another NBA Top Shot clip).

Also read: Controversy Ubisoft Launches NFT, A Good Or Bad Sign?

What are NFTs For?

Blockchain and NFT technologies provide artists and content creators with a unique opportunity to monetize their wares. For example, artists no longer have to rely on galleries or auction houses to sell their art.

Instead, artists can sell them directly to consumers as NFTs, which also allows them to keep more profits.

Additionally, artists can program in royalties so that they will receive a percentage of the sale each time their artwork is sold to a new owner. This is an interesting feature because artists generally receive no future proceeds after their art is first sold.

Art isn't the only way to make money with NFTs. Brands like Charmin and Taco Bell have auctioned themed NFT art to raise funds for charity.

Charmin dubbed its offering “NFTP” (non-fungible toilet paper), and Taco Bell's NFT art sold out within minutes, with the highest bid coming in at 1.5 ether ether (WETH) equaling $3,723.83 at the time of writing.

Nyan Cat, a 2011-era cat GIF with a pop-tart body, sold nearly $600,000 in February. And NBA Top Shot generated over $500 million in sales at the end of March. The NFT single LeBron James Highlight sold for over $200,000.

Even celebrities like Snoop Dogg and Lindsay Lohan have jumped on the NFT bandwagon, releasing unique memories, artwork, and moments as securitized NFTs.

Also read: Instagram Starts NFT Implementation Trial This Week

So, if you are still asking what is nft crypto? Then the answer is a very valuable future asset and cannot be copied and pasted easily.