NFTs and the blockchain.
NFTs use the same technology as cryptocurrencies, that is, the blockchain. This means your transactions are carried out using a digital ledger on a decentralized network and stored in a wallet. In this way, an NFT is registered in a digital ledger. However, they differ from cryptocurrencies because each of these non-fungible tokens is made up of a series of metadata that gives it unique properties. In other words: they are individual and different from each other. The metadata can be characteristics, such as size, name of the creator, etc. As with cryptocurrencies, NFTs cannot be counterfeited. The record is in a shared book, the maintenance of which is carried out by thousands of users throughout the world. The metadata of an NFT guarantees the authenticity of the work.
The role of Ethereum
It is important to take into account that… The operation of the NFTs may vary depending on the blockchain platform that supports them. Initially, it was the Ethereum network that executed the transactions of these non-fungible assets. One of the main characteristics of Ethereum is that it allows the creation of smart contracts (on which the standards to “tokenize” or create an NFT are based). However, according to the “NFT Yearly Report 2020”, there is no apparent correlation between total transactions with NFT and Ethereum (apparently the average weekly volume of transactions with NFT is still very low relative to Ethereum Blockchain).
Truth be told…
NFTs are ready to work on any blockchain and not just Ethereum.
Although most projects are carried out on this platform, it is not the only one. In short, thanks to the blockchain, any digital asset can become an NFT. This process is called “minting” or “tokenizing.” It is clear to us what they are: a single paint drawing or an entry from a Wimbledon final on the seat that a particular player sat in when he won, as an example. There is no other equal and that is why they cannot be exchanged with each other.
As an example: there are two stickers from the 1999 album Panini of Fernando Redondo but no two tournament entries are the same, each one has its seat.
And these NFTs or Non-Fungible Tokens are like this: no two are the same (generally, not always) and they are personal and unique. That is their first characteristic: they are unique.
There will be copies, there will be some similarities but none exactly the same and there is a certificate (or there should be) that shows who the owner is. A certified, protected and controlled authorship.
They are personal, as we have said. You cannot buy a license of a work and share it, it does not belong to several people.
No, the good is only yours.
If you have ownership of a unique Paint drawing that is yours alone, no one can buy a license to have it as well or use it. There is only one owner. Another important feature is… That they are encrypted and based on the blockchain. There is a blockchain that tracks the history of that NFT, who has owned it at all times from its creator to the present. Through what hands it has been passing. That chain of blocks or blockchain of Ethereum allows to verify whose it is in the same way, operating in the same way as cryptocurrencies. Specifically, that Ethereum.
How to buy and sell
Another question you can ask yourself is: but what can we buy as an NFT? It is clear that they are unique, digital files.
How do I buy one?
Well, like any online purchase, actually. The first thing we have to find is what we want to buy since the payment or purchase method may vary. It is not a single website or a global market where you find this type of content, but there are many options to buy NFTs. For example, we can pay with cryptocurrencies or with a regular payment method. A good example is the NBA Top Shop website: basically, they explain you can use credit and debit cards during payment when you make the purchase from the NBA itself, the first time the token is purchased. But once you enter the NFTs market, it is advisable to do it with a digital wallet or a cryptocurrency that can be Bitcoin, Ether, Bitcoin Cash …
How do you buy, then?
It will depend on the NFT itself and on the web page where you are going to buy it. Using pages like Coin Ranking you can see some of them and from the web you can go directly to their purchase. There are also specialized websites such as MakersPlace, a marketplace to find “unique digital creations” and where you can buy or sell your creations in the corresponding section. It is not the only website available and there are many others online such as Rarible, also a marketplace to find sellers or popular works if you want to buy or sell NFT. Or there are pages or stores specific to a topic, as is the case with the NBA.
How much are they worth?
NFT tokens usually vary in price, they do not have a fixed price. But you can check them from the Coinraking website. It is a web page that gives us the profitability or the price of cryptocurrencies in real time but also has a specific NFTs section where you can see the price list of all non-fungible tokens: which are the most expensive tokens, which are the that were sold at the highest price in history. You will be able to see them and you will be able to see the last price, what it was and how long ago. Entering the tab of each one of them we will be able to see a series of details: date of issue, blockchain of issue, name of the token, id of the token, description of the token or how much it has cost and when it has been sold. Beyond the most expensive ones, you can see the latest sales of NFT tokens in any marketplace or Dapp if you want to buy them. You will see the name, the ID, the last price and when it was bought or invested (“right now”, “a minute ago”…)
How are they paid?
As we have explained in the buying and selling section, it depends. It depends on what you buy or from where, if you are the first buyer or not. But generally we can say that they are bought using cryptocurrencies. To do this, you connect a cryptocurrency wallet to dedicated stores or marketplaces and thus you can manage your purchases and sales. Depending on the website or the purchase you are going to make, you can connect certain wallets although they are generally compatible with Coinbase Wallet or MyEtherWallet.
And… What are wallets?
Although it is a complex and extensive process, we will summarize it briefly: as NFTs, bitcoins or cryptocurrencies are not physical money that is stored in your safe or in a bank but decentralized currencies that are not under the control of any entity concrete and whose value is based on the law of supply and demand. Also, creation is done through users using mining. Once you have those cryptocurrencies (you can get them by buying, exchanging, mining) they are stored in purses or wallets.
These wallets are not actually storage of your coins but of the keys you need to access them, in a very summarized way.
And there are them in physical format, paper, web, hardware. They are connected to the Internet or not. But in order to use and pay for these tokens you will need to link a wallet to operate with them and pay. There are many like Edge, with an application for iOS and Android, or the aforementioned Coinbase Wallet or MyEtherwallet that are comfortable to use the cryptocurrencies you have.
If you need advice on this and other issues related to blockchain technology, do not hesitate to contact us. Also, if you want to know more information about this and other topics related to blockchain and others, stay tuned.
Until next time.