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NFT101: What are NFTs and why are they being sold for millions now?

Are you still in obscurity with regards to what NFTs are? For what reason does everybody appear to be fixated on them? In that case, when you're done reading this article, you'll have a decent understanding of what NFTs are and how they can be an important asset to own with a potential ROI worth millions – yes, millions! You'll get the proper reasoning as to why you should be paying close attention to them because these digital arts are here to stay and can change the way music, media, intellectual property, and ownership are handled.

What are NFTs, exactly?

NFTs (Non-fungible Tokens) are collectible digital art that holds intrinsic value, very much like how physical art holds value, so do NFTs. NFTs are a lot like cryptocurrencies such as Bitcoin and Ethereum. But, an NFT is totally unique, and it can't be traded like-for-like, that is the reason where non-fungible starts to make sense.

Any sort of easily produced digital file can be stored as an NFT to be considered as the original copy of that particular art, similar to photography, art, music, recordings, tweets, and even images. You can make NFTs from nearly anything unique that can be stored carefully and holds some intrinsic value.

How do NFTs work?

An NFT basically allows its buyer to claim that they own the original copy of digital art, similarly, you may want to possess the original copy of physical art or the master copy of a music recording.

While blockchain networks support both NFTs and cryptocurrencies, the major distinction is that cryptocurrencies are fungible. One Bitcoin is basically equivalent to another. Since NFTs are non-fungible, each one is unique and can’t be traded as such.

People can make NFTs through a process called "minting," in which they create a representation of their files on a blockchain network. These blockchain networks can keep immutable records tracking each move an NFT is traded, and who owns it. Currently, the primary network used for NFTs is Ethereum, however others including Solana and Cardano are likewise on the go lately.

Why are NFTs being sold for millions of dollars?

On the lookout for NFTs in the form of digital art, one can easily identify something of the customary art market, where scarcity, social networks, and, often less significantly, the content of the art piece is pivotal for deciding an art’s worth. However, NFTs have a few elements that set them apart from their true counterparts.

Unlike other common collectibles, NFT art may not really be hung on a wall. Rather, it allows for a limitless number of things in a particular collection. An extremely huge difference between the art market and NFTs is that the artists take 10% to 20% of the secondary sales. So whenever the NFT will be sold time and again, some part of the deal will always go to the artist. This is actually a uniqueness in the domain of art and can be a major game-changer for artists and content creators. This is possible because the sales of NFTs are recorded on the blockchain networks which then allow artists to receive their share automatically.

Future possibilities for NFTs

Society is gradually making the shift from actual media to completely virtual experiences, with the younger generation already familiar with holding digital collectibles as a symbol of significant worth. NFTs can likewise assist with revolutionizing copyright control, as music artists can utilize tokens to get access to release their music tracks while streaming services might consider it simpler to buy rights to movies and TV series.

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