Are you wondering what NFTs are and how people are buying virtual artwork and digital cats? Blockchain and cryptocurrency markets always stay in the limelight and every new development becomes a headline. However, even after years of blockchain adoption, it can still be tricky to understand evolving technologies and emerging crypto trends. Since its introduction, there have been speculations and concerns about the applications of blockchain and crypto. The latest development in the field of blockchain application is the NFTs. So, what it is, and how digital artists like Beeple made history by selling his NFT for over $69 million? Let’s find out all about the NFT marketplace and how it works.
What are NFT Marketplaces?
To understand NFT, it is important to first understand the concept of “fungibility.” The fungible tokens such as one dollar or Bitcoin hold the same value as another dollar or BTC. These assets can be exchanged with another similar asset. But all the Non-Fungible Tokens (NFTs) are unique and carry a distinct value from another equal or similar NFT. So, NFT is a specific type of digital asset that can be bought and sold online with cryptocurrency. “Non-fungible” refers to something unique that can’t be replaced or interchanged with something else. These are inherently distinct and scarce and unlike fiat money or other assets that are fungible and can be exchanged, NFT cannot be mutually exchanged.
Now let’s come to NFT marketplaces! NFT marketplaces are the online platforms where NFTs (digital collectibles or creations) are bought and sold. This platform can be used to store, display, trade, and even mint NFTs. In simple words, just how Amazon or eBay are for buying or selling goods, NFT marketplaces are for the digital collectibles. All the cryptocurrencies are traded on the crypto exchanges but NFTs need online marketplaces that are specifically developed for NFTs.
How Do NFTs Marketplaces Work?
Similar to goods and cryptocurrency, NFTs also need a platform for trading. So, NFTs exist on a blockchain which is the underlying technology that makes cryptocurrencies possible. Ethereum blockchain is most commonly used for NFTs but some other blockchain platforms also support them. An NFT can be art, GIFs, music, videos, virtual avatars, or unique tweets. It is a collectible that only exists digitally and the buyer has exclusive ownership rights. It means that with an NFT platform, the artists can directly sell their artwork to the consumer instead of relying on galleries or auction houses. For instance, a cat GIF, Nyan Cat was sold for around $600,000.
Anyone willing to buy, list, or mint on an NFT marketplace will need to have a crypto wallet, crypto coins that are supported by the marketplace, and then create an account on the particular marketplace. Your crypto wallet should also be compatible with the blockchain network that supports the NFTs that you are willing to list or buy. It is noteworthy here that for creating or listing NFTs on a marketplace platform you will need to pay the blockchain network fee.
Hopefully, by now you understand what NFT means. However, you might be wondering why anyone would buy NFT. NFTs have become popular because of their authenticity and uniqueness. The owner of this digital artwork or collectible has the right of possessing the original piece even if it is copied by others. It is similar to owning the original Mona Lisa painting even if that painting has been reproduced million times.