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NFT tokens: Current Cryptocurrency Trend

Updated on November 22, 2023

You may have heard about the current trend in the world of cryptocurrencies. Is the term NFT familiar to you?

If you don’t know exactly what to make of it, be sure to pay attention. It is a token that you can make a lot of money from today. Are you wondering what the NFT token actually is and how it works? In this article, you will also find out where you can buy such a token and which types you can choose from.

What are NFTs?

The term NFT is an abbreviation of the English name “Non-Fungible Token”, which can be translated into English as “non-interchangeable token”.

What does it mean?

Simply that it cannot be exchanged for any other asset of similar value. It is therefore not possible to exchange one token for another, as it works, for example, with regular currency, where we can simply exchange one 100 koruna note for another. Each NFT has its own irreplaceable representation.

These are tokens that are stored on the blockchain and that act as proof of ownership of a particular digital product. This could be a picture, a song, a video, etc and they carry information about the owner of the item.

That’s why we can’t exchange them freely between each other. These items remain available to other users, so that, for example, a particular image can be viewed by virtually anyone. However, there is only one owner registered in the blockchain who has ownership rights to the item.

We can compare this to, for example, a land registry entry.

When you buy a property, you are registered as its owner in the land registry.

Everyone knows who owns the property. It’s not possible for you to just swap your property with your neighbour, for example.

Each of these items is unique and has a different value. You can, of course, decide to sell it. Just as is the case with the NFT. These are usually exchanged for cryptocurrency. And that’s usually for Ehereum.

To get an idea of how young NFT tokens actually are, it’s important to remember that the first such tokens started to emerge in 2014.

At that time, however, everything was still in its infancy. It wasn’t until CryptoKitties started more significant commercial activity in 2017.

The really big development of these tokens then took place in 2021.

How do NFTs work?

But lest you have the misconception that NFT is a work of art itself, we must point out that the opposite is overwhelmingly true.

NFTs are merely tokens that are stored on the blockchain. They most commonly use the Ethereum blockchain, but they can also be written on the Polygon, Solana or Bitcoin network. These tokens carry the necessary metadata.

That is, information about the owner and the work, and it also includes a link to the product. Their owners store their tokens directly in their cryptocurrency wallets. In fact, if we wanted to store entire works on the blockchain, we probably wouldn’t get paid.

The functioning of NFTs is based on so-called smart contracts. These are programmed to program a predetermined number of tokens (it doesn’t have to be a single token, but a collection) containing specific data when certain conditions are met, which are then sent to a predetermined crypto wallet.

These contracts also include information about the royalties that the creator can collect or about the deletion of the token. This is after a certain amount of time has passed or after certain conditions have been met.

NFT can be created by basically anyone today. And not only with the help of a complex algorithm, but also through various platforms. For example, on Rarible, Foundation, OpenSea or others. They will create an NFT according to your requirements. But it’s not free. You have to pay a certain fee for this service.

On the other hand, you can create your NFT in just a few minutes without deep knowledge. You can then immediately sell, auction, or just store the created NFT in your crypto wallet.

NFT or cryptocurrency?

Based on what we’ve already mentioned here, you’ve probably realized that NFT tokens are significantly different from traditional cryptocurrency. This is because they are tokens that were not created to market a new decentralized currency. They are merely carriers of information about the work and its owner.

NFTs are therefore created for a different purpose than, for example, Ethereum or Bitcoin.

That being said, the fundamental difference is that it is unmistakable. So you can’t just exchange one NFT token for another.

This is because each one has a different character and a different value. Just like you can’t exchange one piece of art for another. Because each one is unique.

And another significant difference is that NFTs, unlike other types of cryptocurrencies, cannot be split.

If you want to buy Bitcoin, for example, where the value of one Bitcoin is currently around 800,000 crowns, you will find that you would rather buy only a part instead of the whole Bitcoin. For example, 0.3 BTC. This is not possible with NFT. Instead, you can only buy the token in its entirety.

NFT and its types

NFTs are used in various fields. Now let’s take a look at what kinds of NFTs you can get.

Art objects

It is in the world of art that NFTs are a true revolution. Not only new artists are gaining a new opportunity to monetize their works. In fact, they can also sell them in digital form in this way. Owners can then exhibit their works in virtual galleries and, of course, they can also trade them.

Game items

NFT tokens are also very popular with gamers who can own original in-game characters, weapons or anything else they can use in the game. These are traded between players within individual games.

Tickets

NFTs can also take the form of tickets to various events. NFT tickets can of course also be transferred to other persons or resold at will. Such tickets may also include various benefits such as access to the VIP area, refreshments and more.

Collectibles

Among collectible NFTs we can of course also include art and game NFTs, which can be of great value to collectors. But it can also be a variety of collectibles.

NFT Trading

Among collectible NFTs we can of course also include art and game NFTs, which can be of great value to collectors. But it can also be a variety of collectibles.

Why it pays to trade NFTs is therefore clear. In many cases, these are original collectibles that can command a high price today.

Especially within a given gaming community or within art collectors. Of course, every NFT is unique. And therefore has a unique value. But we can also encounter tokens that are worth hundreds of thousands or even millions of dollars.

Tokens are traded on special venues called NFT markets. These can be the aforementioned platforms such as Rarible, Foundation, OpenSea and others. However, in order to trade tokens, you must first get a crypto wallet, of course.

As mentioned, NFTs are stored in crypto wallets. Similar to how it is with regular cryptocurrency. Next, you need to get a cryptocurrency on whose blockchain the NFT token is stored. This is so that you can pay for the token transfer. The most common is Ethereum.

Then all you have to do is look at the different exchanges and choose a token that you think might have future potential. Or simply one that interests you as a collector or player. It depends on what your intentions are for the future with your NFT.

Favourite collections

Let us now introduce some NFT collections that have been very successful with collectors and dealers in the past.

CryptoPunks

Among the first we must definitely mention CryptoPunks. This collection is one of the oldest and most successful.

It was created in 2017, but this collection of 10,000 figures gained its popularity only over time. Many people have found a character among the pictures that they identify with in terms of appearance and values. This is probably why they present them on social media.

Bored Ape Yacht Club

If you’re in the area, you should also be familiar with the Bored Ape Yacht Club’s monkey collection.

This consists of hand-painted images of 10,000 monkeys, each of which is unique in some way. This collection has also become popular with famous celebrities, including Justin Bieber and Madonna. These images are further complemented by a collection called Mutant Ape Yacht Club.

Moonbirds

The MoonBirds collection also consists of 10,000 unique images. This time it is, as the name of the collection suggests, about owls. These tokens bring their holders various benefits, including access to the PROOF Collective club and the virtual world of Highrise. And the longer the holder holds this NFT, the more rewards they can reap.

Conclusion

Let us understand NFTs as virtual tokens running on the blockchain. However, they differ from ordinary cryptocurrency in that they are unmistakable and carry information about the work and its owner.

Today, NFT tokens can be traded by virtually anyone who owns a computer with an internet connection, a crypto wallet and the necessary cryptocurrency.

Trading these tokens has become very popular, especially among collectors – whether of art objects, game characters or virtual gaming accessories.

Trading NFTs can really pay off – the price of many tokens has increased rapidly over time. It should be added, however, that not all NFTs are of high value. Experts even claim that over 90% of current NFTs are worthless.

Still, it may be that their price will rise in the future, or that more will be created that have potential. However, it should be mentioned that the NFT market is currently in a downturn, unlike in 2021. This is because it is a young trend, and it is common for them to encounter fluctuations initially.

Since it is a type of virtual currency, you should keep in mind that investing in NFTs can be quite risky. Also, this market is subject to price fluctuations, so it is definitely not a safe bet. And given that this is a new trend, no one can predict well enough which direction investments in these tokens will develop further.

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