What are NFTs and how do they work?

Last update: 29/03/2024
Author: Sebastian Vidal

A new form of ownership and commerce is capturing the imagination of artists, collectors and investors alike: NFT (Non-Fungible Tokens or Non-Fungible Tokens). These unique digital assets They are revolutionizing the way we think about art, music, and much more. But what exactly are NFTs and how do they work? In this guide, we will explore the fascinating universe of NFTs and provide you with a clear and detailed understanding.

What are NFTs?

The NFT They are digital assets that represent real-world objects such as art, music, video games, and even real estate. Unlike cryptocurrencies, such as Bitcoin or Ethereum, which are interchangeable and have the same value with each other, Each NFT is unique and cannot be exchanged for another of equal value. This uniqueness provides a form of verifiable digital ownership that had not been possible before blockchain technology.

How NFTs work

NFTs work through blockchain technology, the same underlying technology that powers cryptocurrencies. A blockchain is a digital record decentralized system that documents transactions on multiple computers so that the record cannot be altered retroactively. When you create or purchase an NFT, you get ownership registered on the blockchain, which guarantees the authenticity and uniqueness of your digital asset.

    • Creation: Anything digital can become an NFT. This includes digital art, music, and videos. To do so, the creator “mints” their work on an NFT platform, creating a blockchain representation of the asset.
    • Buy and sell: NFTs are bought and sold on specific marketplaces. It's similar to how art is traded in the real world, but it's all done digitally.
    • Property: Owning an NFT is similar to owning a unique piece of art. Although the digital file can be copied, verified ownership of the original work belongs only to the owner of the NFT.
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How NFTs work
How NFTs work

What makes an NFT valuable?

NFTs offer several benefits for both creators and collectors:

    • Property rights: NFTs allow creators to maintain control over their work, giving them a new way to verify and protect their ownership.
    • Profitability: For digital artists and creators, NFTs open new avenues to monetize their work. Additionally, they can receive royalties every time the NFT is resold.
    • Collecting: NFTs provide collectors with a unique opportunity to own original digital art, video games, and more, often with added benefits like access to exclusive events.

What you need to know about NFT to get started

If you are tempted to immerse yourself in the world of NFTs, here are some practical tips to get you started:

    • Investigate: Before purchasing an NFT, research the artist, the project, and the market. Make sure it is a solid investment.
    • Digital Wallet: You will need a specific digital wallet to buy, sell and store NFTs. Make sure it is compatible with the blockchain your NFT is based on.
    • NFT Platforms: Explore various NFT platforms to find artwork and collectibles that interest you. Some of the most popular ones include OpenSea, Rarible, and Foundation.
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What makes an NFT valuable

Impact and Prospects of NFTs

NFTs are opening new horizons in the world of digital art and intellectual property. Although the market is volatile and still in its early stages, the ability of NFTs to grant verifiable ownership over unique digital assets It is already having a profound impact. Whether you're interested in creating, collecting, or simply learning more about this new form of digital asset, the world of NFTs offers a multitude of exciting opportunities and challenges.

Knowledge is power. The more you learn about NFTs and how they work, the better equipped you will be to navigate this exciting new space.