According to Reuters NFT sales hit $25 billion in 2021. This impressive run points to one thing: more people are adopting NFTs, for their passive income potential, and the market prospects look bright. However, caution is the word of the hour since uninformed involvement in NFTs can cause losses. This NFTs for beginners guide is by no means exhaustive but will surely pave the way forward for you.
Increasing Google searches of how to buy and sell NFTs are a testament that even with rising gas fees in Ethereum, NFTs could be a permanent fixture in crypto hallways. The sudden growth in the industry might one day spark discussions similar to the bitcoin cash vs. bitcoin in PrimeXBT and other trading platforms.
To draw even more artists and users, NFT marketplaces have added royalty payments to the mix, making it possible for customers to have a share of profits on future sales, cutting the downside occasioned by high gas fees in blockchains that make NFT exchange possible.
What You Must Know About NFTs Before You Start Dabbling in Them
Knowing about blockchain is the first step to getting into NFTs. However, it is not exhaustive. The increasing technological advancements have added much complexity into the mix
How Does the Blockchain Enable NFT Marketplaces?
The blockchain is an extensive digital chain held together by a series of blocks and enables most crypto assets to be traded. The blocks carry a unique piece of information, and chains keep them connected. These hard-to-crack connections make the blockchain secure when recording information about NFTs.
NFTs assigned in blockchain are unique, more like thumbprints, as no other can be equal to an already written one. Some common examples of digital assets are videos, images, GIFs, Collectibles, and deeds—which represent ownership of cars and other real-world assets.
However, to exchange any NFT assets, blockchain users pay gas fees that compensate for the infrastructure and energy consumed.
What Makes an NFT Valuable?
The creator wields power to add value to digital assets scribbled in the blockchain; it is imperative to keep any created NFT scarce. Scarcity establishes value; this statement is true even in NFTs.
Concert tickets transformed into NFTs, for example, keep their value when they are scant to find, and their value will quickly drop, even to zero, after the concert. Further, NFT concert seats representing VIP seats will fetch more money than other seats.
How Do NFT Artists Make Money?
Artists get their value equivalent to their NFTs in big marketplaces that have many collections. LooksRare is one of those places with a recent trade volume that averaged $41.5k for every purchase made. OpenSea is another place to display and sell NFT items to potential buyers.
Royalties are becoming a thing in the NFT market, as more platforms are launching. These moves are the icing on the cake for artists, as for every transaction made, the artist receives a commission. EulerBeats is an example; the creators receive up to eight percent royalties whenever their creation gets a new owner.
Many such platforms are coming up with content creation as the next target; creators will get credits whenever someone benefits from what they write on their websites or social media. This will cut the distasteful approach by social media giants that give platforms to display written content, but take all the ads profit.
How Are NFTs Useful?
Apart from the fact that they are digital assets, NFTs have real-world use, especially in a world riddled with many fakes. One such issue is copy-pasting—a function that allows duplication of art in computers. NFTs stop this with a unique marker that makes every content the property of the owner.
Time-stamped NFTs are an asset in real estate or the entire property industry. NFTs make it easy to identify the genuine ownership of an asset and enable real-time exchange, cutting out bureaucracy.
Traditional copyright laws were impressive, but with the entry of IP NFTs, people will protect their digital assets better. Tracking tools embedded in NFTs and written in the blockchain can guarantee long-time ownership for any digital asset, including music or even simple websites.
NFTs are digital assets that use blockchain, a similar medium enabling crypto assets offered by different trading platforms. They also hold real-world applications that will back their development for a long time. More marketplaces are coming up with royalties, especially in the music NFT scene, this will encourage more creativity and eventually more people in the space.