What is an NFT?
A non-fungible token is a very abstract word to explain this simple concept. An NFT is a unique token which is not interchangeable with any other NFT. They are saved on a decentralized network, called the blockchain, which cryptocurrencies also use. NFTs represent a file, for example a JPEG, but also an mp3 audio file, or a mp4 video file.
What is the difference between cryptocurrency and an NFT?
Cryptocurrency are fungible tokens, which means that 1 token is worth exactly the same as another Token. Furthermore, this also means that a fungible token can be divided. This is not possible with NFTs, because every NFT is unique. Also NFTs are not a currency, so it is not possible to directly purchase something with them, they can be considered like an asset.
How are NFTs created?
NFTs have to be minted in order to be integrated into the blockchain. This is the moment where the artwork gets transformed into a token. There are lots of websites that have a smart contract ready to mint your NFT, but you can also mint it yourself with your own smart contract.
How do you trade an NFT?
The easiest way to trade NFTs is to connect your wallet to OpenSea.io and buy, sell or make offers on NFTs. There is a financial risk involved with trading.
What is the benefit of NFTs?
NFTs have various different benefits in the different areas they are used. For example in collecting. A picture or a painting, does not give a guarantee that it is authentic. The seller can add a certificate of authenticity, but who knows if this certificate is authentic. The authenticity and ownership of an NFT can always be verified using a blockchain explorer, for example etherscan.io for the Ethereum blockchain.
What are NFTs being sold for?
NFTs are bought and sold with cryptocurrencies like Ether, Solana, Matic, etc.
What is the “Floor price” in NFTs?
The lowest price in a collection of NFTs is specifically referred to as the “Floor price.” In other words, that is the smallest amount of money required to purchase an NFT. The NFT’s owner determines this market pricing.