How the NFT Art Market Works by@strateh76

How the NFT Art Market Works

image
Shariy Ivan HackerNoon profile picture

Shariy Ivan

Crypto investor, copywriter, and entrepreneur from Ukraine. Because of war in my country, I can die. **** Putin!

An NFT or non-fungible token is a unique digital asset that stores image data, audio files, video, or the digital equivalent of a physical asset.

Although non-fungible tokens are now widely used to create digital artworks, they have other uses. For example, in the gaming industry, they can confirm ownership of gaming assets. In the sports collectible card industry, they can purchase and confirm ownership of an exclusive object.

How is NFT Different from other Cryptocurrencies?

A non-interchangeable token is a token that cannot be split and replaced or reproduced from the same currency. Unlike other tokens, which are interchangeable, NFT is a unique digital asset that cannot be divided or replaced.

The value of an NFT is determined by its producer or investor. An NFT confirms ownership of a digital asset or file but does not prevent it from being copied. It only secures the owner's rights to the original copy of the digital artifact.

How are NFTs Produced?

NFTs are produced according to the ERC-721 token standard created by Ethereum developers. The only thing you need to create an NFT is a digital cryptocurrency wallet like Sapien Wallet. You must specify the NFT parameters that cannot be changed after uploading the file that you want to transfer to NFT via IPFS.

After defining such characteristics, such as how much NFT will be produced, the price, etc, the NFT will be produced by paying a fee for the blockchain network transaction. Once the transaction is completed, the NFTs are transferred to your wallet and written to the entire blockchain where they are produced.

How do you get NFTs?

There are marketplaces where NFTs are bid and bought. When the purchase is complete, the NFT will be transferred from the manufacturer's wallet to your wallet. If you want, you can resell the purchased NFTs through e-commerce platforms.

Is NFT an investment vehicle?

NFTs are different from other cryptocurrencies because of their "construction," and their value is determined by the person who produces them, or the investor, not by someone from the outside.

If we're talking about investing in digital art, it's no different than investing in physical art. Similarly, the value of an asset you buy for a collection is determined by parameters such as rarity, age, and appearance.

What problems do NFTs solve?

If we look at today's uses of NFTs, we can say that they primarily solve the problem of intellectual property. It is now very easy to copy a work in a digital environment.

How to be sure of the authenticity of an NFT?

In the cryptocurrency ecosystem, people's reputation is very important. Artists who produce NFTs and want to put them up for sale go through a profile check of the NFT marketplace app to confirm the authenticity of the work.

If you have information about the wallet address of the artist in question, and it is publicly available for payment, you will have the ability to authenticate the work.

In addition, you can be assured of the authenticity of both the artist and their work by tracking NFT movements from the blockchain monitoring app.

Where are the files stored in NFTs?

NFTs contain data from many file formats: image, sound, short video, and document. Since these files are difficult and expensive to store in blockchain, they are stored in a distributed file storage protocol called IPFS.

The uploaded files are encrypted, divided into small chunks, and distributed among the IPFS disks. Proof that the corresponding file has been uploaded to IPFS is stored in the blockchain using NFT.

Are there any known NFT sales?

The most famous NFT sale was made by American artist Bipple, who sold a collage of his work for $69.4 million at an auction organized by Christie's auction house.

Twitter CEO Jack Dorsey's tweet was bought for $2.9 million, and Elon Musk auctioned off his GIF tweet and music as NFT.

What are the future uses of NFT?

As we gain experience with NFT, we see new creative business models being created. First, the digitization of physical assets, i.e., tokenization, can be adapted to a wide range of sectors.

The digitization of physical assets is forcing us to rearrange many of the processes we are used to.

In the future, we can imagine a scenario where states produce their bonds as NFTs and trade them around the world. Possible NFT business models are limited only by our imagination.

Conclusion: where to store NFT tokens?

It’s possible to store NFT tokens in a non-custodial cryptocurrency wallet. It allows you to send and receive cryptocurrency via chat with a few simple actions. Moreover, each user has their rating, which affects people's trust and therefore minimizes the risk of being scammed.

Comments

Signup or Login to Join the Discussion

Tags

Related Stories