NFT is a type of digital token or asset.
Whenever you buy an NFT, you are buying the rights to that specific asset.
- Non-fungible means that it can’t be changed whenever it is created, you can’t split it up and it must be distinguishable from something else.
- A token is a small piece of data that you own.
So, an NFT is a token that you own, that doesn’t change throughout time. Is a piece of data that is owned by an address, and whoever has the password to that address owns that piece of data.
An NFT can be bought and sold to different addresses and that data is verified on a blockchain. You can check the owner history, is always trackable.
It’s important to know what you are buying.
When you buy an NFT, you are buying a piece of data that points to a server that hosts that image.
You should know that the server could change the image, it can change the specific piece of data that you own on the blockchain.
So, what you own, is not the access to the server, and not the image itself, but rather that tiny piece of data that points to the server.
When you buy an NFT, you’re buying a small piece of data that represents something larger. Kind of buying a stock: you’re not buying the entire company, and unless it’s a dividend stock, you’re not getting anything from it.
Why would you want to buy an NFT?
Right now the main reason most people are buying is that they see NFTs as collectibles.
Four main things make an NFT valuable:
- These are the first NFTs, and there’s a chance they could increase in value. The First edition of something has often a high perceived value.
- The utility is the second reason. Some NFT could be used to take part in games, others can be staked, and soon there could be a lot of different uses, even for the real-life event.
- An NFT is valuable if it’s unique or rare. It’s like having a painting. Anyone can have a copy of the famous painting, but only one person, or a museum, can hang up the real painting. The copies have little to no value, while the original can cost millions.
- Ownership history. People buy any kind of things that were previously owned by celebrities. Why not NFTs?
Can someone copy your NFT?
At the end of the article, I listed some of the most expensive NFTs. Does this mean that I copied it?
Someone can copy an NFT just like any other piece of artwork. But the original NFT address can be traced back to the original creator since all NFTs have a log of their transaction history.
Transaction history can’t be erased because is written in the blockchain. The value in an NFT is not the image itself, but the specific piece of data.
How much can NFTs value?
There’s no limit because the value of something is given by people. But here I want to make you see some crazy pricing for NFTs.
