A SNEAK PEEK INTO NFTs
You start watching any web series and we find ads for various financial products & services popping up. These countless advertisements are often advising young and mostly clueless Indians to invest their money in some unconventional form of currencies or financial assets. Many in India are only starting to get a grasp on cryptocurrencies like Bitcoin and Dogecoin. Just as Indians were wrapping their heads around the idea of a digital currency, there’s a new kid in town in form of NFTs, yet another puzzle that leaves many scratching their heads for now.
Before we invest in something it’s best to get a sneak peek of what we are getting into.
What are NFTs?
Many people are scared by the world of digital assets especially when they don’t have much knowledge of it. In lay man’s words, NFTs are regarded as modern-day collectibles. They are available for purchase and sale online, with digital evidence of ownership of any items included. However, understanding this market can be incredibly beneficial because there is a lot of room for financial growth.
To begin, NFT is an abbreviation for Non-Fungible Tokens. In financial terms, NFTs are digital assets underpinned by blockchain technology. It often symbolises digital assets that link ownership to one-of-a-kinds digital or physical goods like real estate, music, artwork, or films.
How secure is it?
When it comes to digital assets, one of the most common concerns is security. Similar to cryptocurrencies, NFTs are recorded on a blockchain that ensures the unique nature of the asset and checks for duplicity. To get a handle on NFTs, it’ll help to get familiar with the functionality and economic concept of fungibility. Typically, fungible items can be exchanged with each other at ease as their values are primarily tied to their unique nature. By creating an NFT, it is possible for creators to verify the scarcity and authenticity of any digital asset.
How do NFTs Work?
Most of the available NFTs are created and stored on the Ethereum network. In addition to this network, NFTs are supported with other blockchains such as Tezos and Flow. The ownership of NFTs can be easily traced and verified while the owner of the token can continue to remain pseudonymous. Different types of digital assets or goods such as artwork, video from a live broadcast, or items in a game can be tokenized. The file size of the digital item does not matter while adding the same to the blockchain.
Depending on the NFT, the licensing rights and copyrights may not be included while purchasing the digital asset. This can be synonymous with how buying an exclusive piece of art or a limited edition does not provide you the exclusive rights for the same.
Types of NFTs
Investors investing in NFTs are exposed to a variety of choices. Different types of digital objects such as videos, music, images, texts, tweets, and others can be turned into an NFT. The most high-profile sales have been accounted for by digital art pieces. NFTs can also have patches of land in different virtual world environments. Some of the prominent entries of NFTs are collectables, games, event tickets, music, media, virtual items, memes, real-world assets, domain names.
In a nutshell, we can say that given India’s expertise in computing technology and the notion that the crypto market is at the frontline of technological transformation, the country might substantially gain from becoming a crypto innovation epicenter.
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