A quick guide to NFTs

by James · April 26, 2023

The rise of cryptocurrencies such as bitcoin also favored the spread of NFTs. Unless you’ve been living on Mars for the past year, you’ve probably heard of them, probably without a clue what they are. We’ve got you covered with our quick guide to NFTs.

Table of Contents

What does NFT stand for?

NFT stays in non-fungible token. This was not clear, sorry. Non-fungible means unique. Therefore, it can neither be reproduced nor exchanged. Bitcoin and physical money are fungible tokens. If you exchange one bitcoin for another, you get the same – with the same value. NFTs have a digital signature that makes it impossible to exchange them for another or equivalent.

What do they have to do with cryptocurrencies?

They are both based on blockchain cryptography technology. A blockchain is a digital ledger that collects information in groups called blocks – which have a specific storage capacity. A block is closed and connected to the previously filled block, forming a blockchain when filled. This technology records information in a complex way to crack, change or hack.

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It was a personal experience that gave Georg Müller the idea for BAM Ticketing GmbH. He was working in the open office of a bank and observed that many of his colleagues wanted to buy a Rammstein ticket – but no one got one.

How does an NFT work?

NFTs allow the assignment of ownership of a unique piece of digital data, traceable using Ethereum’s blockchain as a public ledger. Ethereum is a decentralized global software platform best known for its cryptocurrency ether – ETH, and it is the most widely used blockchain technology for NFTs. An NFT is imprinted – created – from digital objects that represent either a digital or non-digital asset.

What can be an NFT?

An NFT is a digital asset that can come in the form of art, music, in-game items, videos, and sneakers in a fashion line. A tweet can also be an NFT. They can be compared to all physical collectibles, but they come in digital form. Instead of buying a painting, cartoon or action figure, the buyer gets a digital file.

Why are NFTs so popular?

Despite being around since 2014, the main reason behind NFT’s success is the boom in cryptocurrencies and blockchain technology. What made them stand out was the fact that they became a popular way to buy and sell artwork online. The fact that they represent unique ownership appeals to collectors, who can claim to have the exclusivity of a painting. An NFT can only have one owner at a time.

How can I buy an NFT?

Before buying your first NFT, be aware that most of them are paid with ETH. How to get ETH? If you have an account with a cryptocurrency exchange – such as Binance, Kraken or FTX – you can easily buy ether and send them to your wallet, which can be connected to NFT’s marketplaces. Most sell NFTs through auctions where you can bid on the given NFT. Some of them also trade tokens at a fixed price.

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What are the main NFT marketplaces?

All marketplaces allow users to display, list and advertise their NFTs, and users can also exchange their NFTs directly by sending them from one wallet to another. Furthermore, most marketplaces offer wallets to store NFTs; some also allow users to create NFTs from scratch.

Depending on the marketplace you choose, you will find different types of NFTs. OpenSea claims to be the largest existing NFT marketplace, hosting various types of collectibles – from artwork to video game items. NBA Top Shot is a platform where users can buy and trade collectibles from the most famous basketball league in the world – such as highlights, player stats and box scores.