What is a Non-Fungible Token? How to get NFTs?

	As you’ve heard by now, NFT stands for Non-Fungible Token. But what does Non-Fungible Token actually stand for?

Fungible is a legal term, and it basically means “replaceable”. Consequently, non-fungible means “non-replaceable”. A Token, is a piece of digital data, a digital asset, that is sold and bought online using blockchain technology. In other terms, these "sales” transactions are encrypted in the form of blockchains where proof of transaction and ownership of those NFTs is present.

An NFT is therefore a piece of digital data –a token- that is totally unique -non-fungible- that has value just like any other physical piece of art.

		## Why sell or buy NFT?

	Here are 3 major reasons to why people are jumping on the NFT bandwagon:

		### 1. It is more than a hype

	Selling or owning an NFT is not only a hype, but it actually has a lot of concrete benefits. For content creators, NFTs and Blockchain technology are a remarkable upgrade. It enabled  content creators and artists to monetize and sell their work without relying on traditional auctions and art exhibitions. The traditional art industry has always been a billion-dollar industry. 

Nonetheless, according to Forbes Advisor the NFT market hit $41 billion in 2021 alone, which is approaching the total value of the global fine art market.

		### 2. Numbers do speak for themselves!

	The NFT market specifically exploded after an auction done by Beeple, a digital artist, who sold his now famous artwork “Everydays: The First 5000 Days” for $69 million. Right after this unprecedented sale, an 8-bit CryptoPunks artwork by “Larva Labs” sold for a whopping $532 million on October 2021. 

As a result of these major events, NFT funding skyrocketed to more than $2.1 billion by the end of 2021. This is a 6,523% jump from 2020’s full-year funding. Collectors have also invested around $41 billion in the NFT marketplace in 2021. 

After this explosive growth in 2021, the NFT market has now found more stable grounds to stand upon. It has matured from a new and risk-full market into a matured version of an innovative investment stage. As of May 1, 2022, collectors have spent a massive amount of $37 billion in the NFT marketplace for that year.

		### 3. Visibility and financial investment 

	So not only do NFT creators get more visibility and recognition via selling and exhibiting their NFTs, but they also get to benefit from selling their work for notable prices. In fact, artists can sell their NFT while programming in royalties to this same NFT. This means, they keep getting a certain percentage on the resale of their own art. 

This boom in NFT popularity has led to the expansion of a great “investment” platform. Any NFT that you buy allows you to own this original item. It will contain a built-in authentication, indicating that you, and only you, own this NFT. It serves as a proof of ownership. It’s an asset that you own. People who collect these NFTs actually value this ownership of several valuable NFTs rather than the NFTs themselves.

So, if you’re looking into buying or to selling an NFT, there are a lot of factors to look into. And we can actually discuss the benefits of owning or selling an NFT on very much larger scales.

		## Now, with more definitions: what does blockchain mean, and what does it have to do with

NFTs?

	Sounds a little complicated, but blockchains aren’t so hard to understand actually! It’s true, blockchain is literally a chain of transaction data with each block of data linked to the one before. But what does it actually do?

It basically started when people were wondering about how they can exchange money through the internet without relying on a bank or any other kind of intermediary. Here is how it works:

Let’s say you need to pay 5 crypto coins in exchange for an asset. But, instead of having the bank validate this transaction, the exchange process goes on this public ledger that collects all the transactions happening, everywhere, and all the time. This creates some sort of list, or chain of transactions.

		## But, this is where it gets a little tricky. How does the system know that you’ve got those 5 crypto coins to pay for this asset?

	Well, since the transaction is now public record, computers  will detect any inconsistency. So if you don’t have these 5 crypto coins, your transaction request will not pass. But if you do have them, then the transaction is validated. Following its validation, the transaction will proceed and then is encrypted into that record. Now, it is part of the blockchain. (To know more, read  our article about <a href="https://resh.community/the-blockchain-and-its-impressive-use-cases/">The Blockchain and Its Impressive Use Cases</a>)

		## But what does it have to do with NFTs?

	Let’s say that you want to purchase an NFT that is worth 70 crypto coins from the creator of this NFT. The blockchain’s job is to list this transaction, verify if it’s valid, and then make it happen. After the validation of this transaction, you now have a digital certificate encrypted into the blockchain that proves that you now own this NFT. So now, it is written in an unalterable public record that you payed for this NFT, that you now own it, and that this non-fungible token is going to somebody new –you-!

What makes this transaction very reliable is actually based, not only on physical proof, but also on human psychology. The fact that you own a certain NFT, that you bought with your own coins, is validated by the entire crypto community.  

		## what makes blockchain technology so reliable to exchange NFTs? 

	What makes the blockchain very reliable and advanced are its features. The blockchain is:

1. Programmable: you can add smart contracts to it for instance.

2. Secure: keep in mind that all the records are individually encrypted.

3. Unanimous: All of the network’s participants agree on the validity of the records.

4. Time stamped: All the transactions are timestamped and recorded into a block.

5. Immutable: The transactions that are validated cannot be changed or reversed.

6. Distributable: For complete transparency, all of network’s participants have a copy of the ledger.

    	## Did you know?
   
    According to Digiconomist, Ethereum consumes about 112 terawatt of electricity per year, making it comparable to the power consumption of the Netherlands and even more than the Philippines. So theoretically, the blockchain is this public ledger that permits transactions, but what about the mechanical side of the blockchain?
   

The blockchain relies on a huge number of computers that are always doing the needed calculations to make the blockchain system work. Keep in mind that these computers do not have screens, or memory. They do not resemble computers you would use for your day-to-day work. Their job is to keep on rolling micro-calculations all the time.

What is mind blowing is that this technology is shifting the traditional way of doing things. We are not investing 112 terawatt of electricity usage per year into transportation let’s say or any other kind of physical action. But rather, on very theoretical and new ways of valuing and trading assets and properties. But if you really think about it, isn’t this how the internet started in the first place?

So for now, you can only start to imagine the enormous potential the crypto world has and how it will evolve through time.

DYOR and Resh Out!

NOTE: It is particularly important to pay attention to (and try to avoid) Ponzi-schemes and shitcoins in DeFi and NFT projects.