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GUIDE TO NFTs

Last updated - August 09, 2023

NFT, let's look at this Non Fungible Token acronym. Non Fungible, this interests us. It literally means not replaceable, that is, it cannot be exchanged for others. Therefore it is a Token that cannot be replaced. Taking this into account we can assert that it is a kind of copyright for digital objects. In practice, think of a drawing, a photo, a software that you created from your PC or smartphone, how do you prove that it is your work? It is on your PC or smartphone and therefore it is your property. But if you post your work on a Social Network or on a metaverse, how do you prove that it is yours? If you want to sell it or buy more, how can you be sure they are not fraudulent works? The NFT takes care of this, guaranteeing the ownership of that specific digital work.

What can you turn into an NFT?

Anything your mind can give birth to can become an NFT. A piece of music, a drawing, a digital image, a video, a photo of your physical work, a novel, a contract or an app. Anything that can be digital.

How does an NFT work?

NFTs are basically part of the Ethereum blockchain, a cryptocurrency. Ethereum is similar to Bitcoin, but its blockchain was designed to support NFTs. This is the reason that NFTs are only traded, sold or bought if you have Ethereum. For the sake of completeness we must say that there are some blockchains connected to Ethereum and you can trade, sell and buy NFTs through them. We are talking about Polygon Matic, where Matic is the cryptocurrency. In this blockchain exists the WETH (Whrapped Ethereum) which is specular to Ethereum and interchangeable. In this case, NFTs can be transferred from one blockchain to another. The main difference between the main Ethereum network and the Polygon secondary network is that on Polygon the transfer fees are infinitely less.

Where is it possible to trade NFTs?

As NFT is a digital property other than copyright, it has separate markets. The most famous market for trading, selling or buying is the large OpenSea web platform (https://www.opensea.io).

Why is NFT used?

There are mainly three reasons why people use NFTs:

  1. For pure pleasure. Who has never had a picture hanging in the house? The NFT is bought just like a painting, because it is a work of art that people like. To use it as an avatar in social networks, in the metaverse, to hang a print at home, to upholster the car body, as a symbol of belonging to a community, etc.

  2. For investment. NFTs are bought and held until the value of that particular NFT increases, then it is sold for profit.

  3. For the Metaverse. NFTs are used in virtual worlds where people interact and play through their Avatars. In the metaverse it is possible to build NFTs and sell them and make a real profit because often earnings are convertible into cryptocurrency and fiat money. A metaverse can be a virtual 3D galaxy, a planet, a continent. Some metaverses are Decentraland and SandBox. Some metaverse games are Farsite and Axie Infinity.