you must have heard NFT. The buzz about non-fungible token Getting bigger: The topic keeps popping up in the news and has caught the attention of celebrities like Neymar and Justin Bieber, who have launched their own NFT projects and collectibles.
The always high value also increases curiosity about the subject. After all, what are these such valuable digital assets? What is their role in everyday life?
This article clarifies the main issues surrounding NFTs and shows how to get involved.
What is NFT?
NFT is an acronym for non-fungible token.It is a unique digital asset registered in blockchainwith a unique identification code and data that distinguishes it from all others.
Each token can be identified by a unique transaction record. In simple terms, this means that no two NFTs are the same.
In practice, NFTs represent real-world objects, which can come from art, music, games, and more. They are bought and sold online, often in cryptocurrencies.
Although they are only “popular” now, NFTs have been around since 2014.
How do NFTs work?
Most NFTs are part of the Ethereum blockchain. But other blockchains may implement their own versions of NFTs.
NFTs are created or “minted” from digital objects representing tangible and intangible items, including games, graphic arts, Gifs, videos, collectibles, avatars and video game skins, music, and more.
There is so much content that can become an NFT, even a tweet. For example, Twitter co-founder Jack Dorsey sold his first NFT tweet for over $2.9 million.
What are NFTs for?
Essentially, NFTs function like collectibles, but in a digital format. Therefore, instead of hanging the actual oil painting on the wall, the buyer of the NFT owns the same painting in the form of a digital file.
NFTs also acquire exclusive property rights. That is, they can only have one owner at a time, and using blockchain technology makes it easy to verify ownership, as well as transfer NFTs between owners.
As such, NFTs offer artists and content creators a unique opportunity to monetize their products. One example is that 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.
Additionally, artists can arrange royalties to receive a percentage of sales when their artwork is acquired by a new owner.
This monetization also goes beyond art. For example, brands like Charmin and Taco Bell have auctioned off themed NFTs to raise money for charities. In sports, NBA Top Shot generated more than $500 million in sales at the end of March, of which $200,000 was raised by an NFT launched by LeBron James.
What is a monkey NFT?
In January 2022, news broke that player Neymar had purchased two monkey NFTs for around $1.1 million. After all, what is it about?
It is an NFT that is part of a collection called “Bored Ape Yacht Club”. The collection features 10,000 unique “Boring Monkey” digital artworks, generated by a random algorithm, each with its own combination of characteristics: colors, clothes and accessories.
Some of these combinations are more common, while others are more rare – making them more expensive. In addition to the character’s commercial rights, Neymar will also be able to participate in both physical and digital exclusives.
How to buy NFTs?
If you want to start your own collection of NFTs, you need to follow a few steps. First, you need to get a digital wallet that allows you to store NFTs and cryptocurrencies. This also means that you need to buy cryptocurrencies such as ether to pay for the purchase of NFTs.
Cryptocurrencies can be purchased with credit cards on platforms such as Coinbase, eToro, Kraken, and PayPal.
It’s also important to remember that these transactions incur fees. Most exchanges (cryptocurrency exchanges) charge at least a certain percentage of transaction fees when users buy cryptocurrencies.
Armed with cryptocurrency and knowing how transactions will happen, consumers can search for NFTs they are interested in and buy non-fungible tokens.
What are the main platforms for trading NFTs?
For NFT negotiations, whether buying or selling, some markets or platforms are already well known, especially when it comes to securing transactions and owning a wide range of digital assets.
Some of the most widely used platforms are:
– open sea
– super rare
– Myth Market
– Atomic Market
– Enjin Market
– Bread exchange
– Know the origin
How does the valuation of NFTs work?
To understand how the valuation of NFTs works, we need to go back to the concept of tokens. There are two types of tokens: fungible and non-fungible. Fungibles, like coins, always have the same value. A real value is always a real one, so a one-dollar bill can be replaced by any other real bill.
Non-Fungible Tokens (NFTs) are unique and cannot be replaced by any other token. They may gain or lose value regardless of the currency used to buy it. Uniqueness and scarcity add to its value.
Therefore, the more unique and rare the NFT, the more its creator can raise the price for those who want to acquire the digital asset.
How to invest in NFTs?
A straightforward way to invest in NFTs is to buy cryptocurrency exchanges like Binance and Mercado Bitcoin, as well as some marketplaces like OpenSea and SuperRare, which offer acquisition options for NFTs. In this case, investors will receive a return based on the valuation of their personal assets, which depends on the needs of other users.
For those who prefer to bet indirectly on the sector, Brazilian brokerages have plenty of options. For example, the Trend XP Metaverso Fund’s index contains stocks of 30 global companies that are somehow related to this universe. Another option is the Coin NFT Fund from Vitreo with a minimum investment of R$ 1,000 and an annual management fee of 0.34%, plus a performance fee.
There is also the NFTS11 ETF managed by Investo, a B3-listed index fund that invests in media and entertainment tokens and replicates the performance of the MVIS Crypto Media and Entertainment Leaders Index.
* In collaboration with Wesley Santana
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