NFT: A Simple Explanation Of Meaning Of NFT, How To Make Money From It

The digital world has been thrown into a frenzy over the latest opportunity in the crypto sphere called Non-Fungible Tokens (NFT). These digital assets seem to have exploded out of the ether this year.

Although introduced in 2014, NFT started gaining popularity in 2021 as people and brands started joining the hype.

Meaning Of NFT

NFT is a digital asset that represents real-world objects like artworks, music, games, and videos that can be bought and sold online using a cryptocurrencies blockchain like Ethereum. As a result of blockchain technology, the owner of an NFT is given a distinct digital signature to his NFT. Every NFT is unique, none is or ever will be of the same values.

READ ALSO: 12 Most Popular Types Of Cryptocurrency, Tips To Invest Safely

The word “Fungible” in NFT means something that can be exchanged for something of like value. Whatever amount in Naira is fungible. Even Bitcoin is fungible. Anything that can be replaced easily for something else irrespective of what value is attached to it is simply fungible.

However, an item is said to be non-fungible if it can not be replaced with something else. For instance, you as an individual is non-fungible. The special love a mother has for her child is non-fungible.

NFT is a non-fungible digital asset because of its uniqueness. You can never an NFT of the same value anywhere on the internet.

This unique digital stamp on any minted NFT was made possible by blockchain technology. Blockchain is a special database system that records all digital transactions in block forms. It is almost impossible to cheat or hack the system.

Still confuse? I will explain.

Do you remember how you usually make transactions using your ATM card? Yeah. You just slot your card into the machine or POS terminal and either withdraw cash or do a transfer without thinking much about what happens at the backends. What happens is this, the moment you enter your information instructing the machine let’s say for a withdrawal, the command is sent straight to the database of your bank where all your account details are stored informing it that you want to withdraw cash from that particular point. Once that instruction is processed successfully, it will be imprinted in the database of your bank and nothing will change unless hackers want to be mischievous.

However, when it comes to the transactions of NFTs on the blockchain, things are almost similar to the traditional banking system except that ledger that records NFT transactions are public and decentralized to all parties concerned and it is almost difficult to hack.

Can Nigerians make money from NFT?

Nigerians started cashing out big time in NFTs around 2018 courtesy of one Osinachi Igwe who sold one of his artworks for $38,437. Even recently an NYSC member gave an elderly drummer N600,0000 after selling his picture as NFT. Right now, many young talented Nigerians are making a lot of money in dollars by just minting and selling NFTs in the digital marketplace.

Is it only pictures that can be sold as NFT?

Not really. Across various NFT online platforms, people are making money from minted videos, music, and games. However, it appears that pictures are the most popular digital assets on the NFT marketplace.

Is NFT another Ponzi scheme that would crash in the future?

Well, I can’t predict for sure whether NFT bubbles would burst in the future as a result of its current hype. However, one thing is certain, NFT is the latest digital innovation at its early stage and probably might evolve into another new investment opportunity for the world economy.

How to Buy NFTs

If you’re keen to start your own NFT collection, you’ll need to acquire some key items:

First, you’ll need to get a digital wallet that allows you to store NFTs and cryptocurrencies. You’ll likely need to purchase some cryptocurrency, like Ether, depending on what currencies your NFT provider accepts. You can buy crypto using a credit card on platforms like Coinbase, Kraken, eToro, and even PayPal and Robinhood now. You’ll then be able to move it from the exchange to your wallet of choice.

You’ll want to keep fees in mind as you research options. Most exchanges charge at least a percentage of your transaction when you buy crypto.

What is NFT Crypto?

NFT stands for non-fungible token. It’s generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but that’s where the similarity ends.

Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value—one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.

NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible).

On a final note, I think investing in NFTs might not be a bad idea for the average Nigerian who wants to earn extra cool cash, however, it is thoroughly advised that due diligence and research need to be carried out before diving into the speculative and unpredictable NFT digital world.