Everyone is talking about NFTs. Let’s find out why this new cryptocurrency is becoming so popular.
An NFT or Non-Fungible Token is a digital asset representing ownership of real-world objects. What is unique is that it represents a virtual or physical item that can not be copied or reproduced, meaning the original cannot be replaced. This new cryptocurrency is bringing a new era of innovation to the world of arts, entertainment, and even real estate, creating new rules for how we hold and own assets and the process of buying and selling them.
Table of Contents
What is NFT?
An NFT can be many things: art, music, videos, sports, and even real estate. To understand the characteristics of an NFT asset, it’s vital to understand the types of assets there are in the world. This article will look at Fungible and Non-Fungible.
Fungible assets can be substituted. This means that they can be reproduced or traded, and the value will remain the same.
If an asset, for example, a gold necklace, is worth 28,000 baht, you can substitute it for a gold bar worth 28,000 baht. In the end, it is still gold, just in a different form. Or another example that many people often use is that if you have a 1,000 baht banknote, you can also exchange it for 10 100 baht banknotes.
NFTs can also be traded. A famous case known worldwide is when Twitter CEO and Co-Founder Jack Dorsey opened up a bid for his first tweet, tweeted on March 22, 2006, with a short message: “Just setting up my twttr”. Although it might sound crazy, this NFT sold for 2.9 million US dollars or over 89 million Thai baht.
Are NFTs used to sell art?
Now that we understand the two asset types, the next step is to take a closer look at NFTs. You’ll notice that when talking about NFTs, most people will focus on the subject of art. But in reality, an NFT can be anything that can be represented in digital form.
NFTs can also be traded. For example, a famous case that is known worldwide is when Twitter CEO and Co-Founder Jack Dorsey opened up a bid for his very first tweet, tweeted on March 22, 2006, with a short message that said: “Just setting up my twttr”. Although it might sound crazy, this NFT sold for 2.9 million US dollars or over 89 million Thai baht.
However, if you think you can capture Jack Dorsey’s first tweet and sell it yourself, you’re wrong, because being an NFT means that there is only one. Even if Jack Dorsey himself decided to capture that tweet and sell it again, he can’t do it either because the original piece is an image he has sold and has already been transferred to the owner.
Before getting into the NFT industry, you should know that these assets can only be traded with cryptocurrencies, and NFTs are a type of cryptocurrency. They have a specific form and can not replace other types of assets. You must buy or sell the whole unit because each NFT can have only one owner. This is unlike conventional cryptocurrencies, such as Bitcoin, which can be split into the proportion of the investment that each person buys.
If I want to buy or sell NFTs, what should I do?
- Prepare the work that will be made into an NFT
First of all, if you are trying to develop an idea for a way to make money from NFTs, the first thing you need is a portfolio to sell. Anything can be an NFT, you just need to convert it to a digital file, such as .gif, .jpg, .png, .svg, .wav, .ogg, .glb, .glt, .webm, .mp3, or .mp4. Platforms to buy and sell NFTs support these formats; you will just need to look at the conditions set by the new owner and upload the required size.
- Apply to open a Digital Wallet
To buy or sell NFTs, you have to use digital currency. Therefore, it is necessary to have a Digital Wallet to manage your digital money. You can choose whichever platform you prefer, but the most popular platform would be MetaMask.
- Open an account to buy and sell cryptocurrency
You need to exchange the “cash” you have to buy digital assets. However, it is not possible to buy crypto coins yourself, so you need an intermediary to exchange cash for digital assets of any currency you want. In Thailand, some platforms provide this service, including Bitkub and Zipmex. However, do be careful; we advise you to choose a platform regulated by the SEC (Securities and Exchange Commission). You can check the list of companies under their supervision here.
- Buy Ethereum coins (ETH)
Since the purchase and sale of NFTs are mainly based on Ethereum (ETH) digital coins, this currency must be attached to your wallet.
- Upload your work to a marketplace
If you want to sell your work, you can upload your portfolio to the system through a marketplace platform. You need to have cryptocurrency in your Digital Wallet, even if you simply want to sell your works, because each marketplace charges a transaction or Gas Fee, which is usually charged in ETH.
What is OpenSea?
OpenSea is the most popular marketplace platform or NFT trading platform. It charges lower fees than other platforms and has an extensive portfolio of NFTs. It supports three cryptocurrencies, namely Ethereum, Klaytn, and Polygon. If you already have a portfolio and digital money, you can create a profile and upload your work to sell.
What are NFT tokens?
As mentioned earlier, NFTs are a token or type of cryptocurrency, but NFTs cannot be used to trade other types of crypto-assets.
How will NFTs affect future businesses?
If you look at the current picture, it can be hard to find common ground with the NFT world, which can seem complicated in many ways for those who may not be interested in cryptocurrency. However, the term we should all be familiar with is ‘Metaverse’.
NFTs may not be that common in business, but the Metaverse will soon become a shared space between humans, businesses and the world of digital assets. As more technologies are developed in the next few years, people will understand and accept living in the virtual world even more. People will settle down in that world. And where there are people, businesses are sure to pop up.
But if you look closer, an example of the virtual world and business colliding is demonstrated by the younger generations turn to careers as gamers. If this happened 10-20 years ago, these kids would be viewed as game addicts, but today some of them are making hundreds of millions of baht a year pursuing this type of career.
Nowadays, we can start using digital money to buy everyday products. Even if it is not yet widespread, it may become part of your regular shopping routine in the future, and businesses will need to be ready to adapt.
Why should I invest in NFTs?
Investors know that cryptocurrencies are highly volatile compared to other investments. NFTs, however, are different from other cryptocurrencies. The value does not depend solely on market volatility. Many elements affect it, such as the work’s owner and origin.
Anything that is rare and will never occur again inevitably increases in value with time and demand. Therefore, if looking at the long term, NFT investments are pretty interesting. However, I want to remind you that not every NFT will be needed in the future; we can’t predict which work will become the ‘Talk of the Town’ in the future until people compete for ownership of it. This could turn you into a millionaire overnight, but that doesn’t happen to everyone. Every investment carries risks, so understanding the assets to invest in is always the most important factor to consider.