- Date : 02/03/2022
- Read: 3 mins
- Read in हिंदी: भारत में एनएफटी में कैसे निवेश करें?
What are non-fungible tokens (NFTs)? How are NFTs different from cryptocurrencies? Can you buy and sell NFTs in India? Make your entry into the world of NFTs through this guide.
Jack Dorsey, CEO of Twitter, sold NFT of his first-ever tweet "Just Setting up my Twitter" for $2.9M. The popular Doge Meme invented a new crypto coin 'Shiba Inu, a Japanese dog breed. The concept of NFTs surely sounds new, but 'Coloured Coins' was the first NFT in 2012. Cryptocurrencies - Bitcoin, Ethereum, Dogecoin - are fungible tokens, i.e. you can exchange or trade them, just like physical money, because 1 BTC is always equal to 1 BTC.
What is an NFT?
A Non-Fungible Token or NFT is a cryptographic token with a unique authenticity and individual character. It is a non-interchangeable unique digital asset to have one-of-a-kind digital art, including artwork, music, and other collectables. If you have NFT of something, it does not mean you become the asset owner; you get a link to the original file's location, which is present somewhere on the web.
Why is NFT so popular?
There is a single original piece of every artwork in the real world, and only one person can own it. Similarly, you will own any digital artwork only if you have its NFT or digital token.
Physical artwork is easily torn and destroyed, which is unlikely with NFTs.
This caught the eyes of people around the world. However, the concept of NFTs is still new for India, but this sector will certainly boom in the coming years. The folk artists of India will bend towards protecting their Intellectual Property Rights through NFTs.
Collins Dictionary stated 'NFT' as the Word of the Year, 2021.
How does the buying and selling of NFTs work?
When buying NFTs, a ledger entry holding the address of the file is made. This address determines your ownership of the digital asset. And when you sell NFTs, the code representing the NFT is transferred to the blockchain (publically distributed database), and the other person can easily check who is the true owner of that particular NFT. So it is a tradable digital receipt.
Can you make a steady profit/income from NFTs?
The best way to generate passive income from NFTs is by becoming a creator and minting your work with royalties. So, whenever someone buys your NFT, you will get some portion or percentage of royalties.
You can also stake at NFT to generate an annual percentage yield (APY). Again, it depends upon the rarity of NFT.
After gaining hands-on experience, you can try trading the NFTs you hold.
You may like to read more about investing: Are You In Step With The New Investement Trends That Are Emerging Post COVID-19?
How to invest in NFTs?
- Create a digital wallet.
- Buy cryptocurrency to buy NFTs. Ethereum is a widely accepted coin for NFTs.
- Visit websites like OpenSea, Rarible, SuperRare, Nifty Gateway, etc., to search NFTs.
Things to Keep in Mind before investing in NFTs
- Get the complete knowledge
- Do not fall into the trap of malicious NFTs
- Research about the future of NFT you wish to buy