Non-fungible tokens (NFT) have been the talk of the crypto town for some time now. These are crypto tokens used to represent digital non-fungible assets such as artwork, designs, images, videos, and more.
Because of their unique ability to allow the trading of non-fungible assets online and a very secure authentication mechanism, NFTs are readily being adopted by creators and artists globally. In addition, many developers and startups are also actively building solutions, including marketplaces, for NFTs.
Whether you are planning to buy NFTs or are just curious about all the hype around them, here are the 7 questions (with answers) to get all your NFT doubts resolved.
NFT Questions with Answers
1. Can I invest and earn with NFTs?
Yes. NFTs work practically like any other crypto token. You can buy them and then resell them for a profit. Of course, choosing the right NFT with high demand and growth potential is the key to making a good profit in this market. Besides trading NFTs, you can also make money by purchasing, holding, breeding, and minting NFTs, as projects like SharpBunnies offer rewards (free tokens) to their NFT buyers.
2. Are NFTs secure?
Technically, yes. All NFTs use a high-end encryption and validation mechanism to allow secure storing and trading of digital assets. All the underlying data and asset information is stored in separate, highly secure databases.
However, the actual security feature of a particular NFT will depend on its own smart contract. The more robust the smart contract, the more secure is the NFT.
3. What is the transaction fee to buy/sell NFTs?
The transaction fees to buy or sell an NFT will depend on the particular NFT marketplace platform. In general, the traders will have to pay a gas fee. Other fees or charges linked with NFT creation include the platform fee (NFT creation), marketplace commission, etc.
4. What is an NFT marketplace?
An NFT marketplace or store is a digital platform providing services for NFT selling, buying, and auctioning to NFT creators/buyers/holders.
5. Can I create/mint my own NFT?
Yes, you can mint your own NFT/s using a smart contract on an NFT-enabled blockchain. That is, if you have your own unique digital assets that you would like to turn into NFTs to auction online, you can use the Ethereum blockchain to build your own unique non-fungible tokens.
6. How do NFTs ensure authenticity (prove ownership)?
Well, the primary USP of NFTs is their ability to guarantee authenticity. Each NFT represents a unique digital asset whose identity and ownership information is securely stored in an immutable blockchain ledger and can be easily verified in case of a dispute.
7. How do NFTs work?
NFTs can be minted using an existing blockchain that supports NFT creation like the Ethereum blockchain. Every non-fungible token has a unique id code and metadata, which holds the asset and ownership information of the linked asset.
The same can be stored in a secure, preferably peer-to-peer, file storage system like IPFS. Digital assets linked with NFTs can be seamlessly traded on dedicated platforms called NFT marketplaces.
Want to know more about NFTs? Ask your questions in the comment section.