What is an NFT and how does it work

NFT is a type of digital token or asset.

Everytime you buy an NFT, you’re buying the rights to that particular asset.

Non-fungible means that it can’t be changed at any time when it is created, you can’t split it up and it should be distinguishable from something else.

A token is a small piece of data that you just own.

So, an NFT is a token that you own, that doesn’t change all through time. Is a chunk of data that is owned by an address, and whoever has the password to that address owns that piece of data.

An NFT might be purchased and sold to totally different addresses and that data is verified on a blockchain. You may check the owner history, is always trackable.

It’s essential to know what you’re buying.

Whenever you purchase an NFT, you might be buying a piece of data that points to a server that hosts that image.

You need to know that the server may change the image, it can change the particular piece of data that you own on the blockchain.

So, what you own, is not the access to the server, and not the image itself, however relatively that tiny piece of data that factors to the server.

If you buy an NFT, you’re shopping for a small piece of data that represents something larger. Kind of buying a stock: you’re not shopping for your entire firm, and unless it’s a dividend stock, you’re not getting anything from it.

Why would you want to purchase an NFT?

Proper now the principle reason most people are shopping for is that they see NFTs as collectibles.

4 main things make an NFT valuable:

These are the primary NFTs, and there’s a chance they may increase in value. The First edition of something has usually a high perceived value.

The utility is the second reason. Some NFT could possibly be used to take part in games, others may be staked, and shortly there may very well be a whole lot of totally different uses, even for the real-life event.

An NFT is valuable if it’s distinctive or rare. It’s like having a painting. Anyone can have a duplicate of the well-known painting, however only one particular person, or a museum, can hang up the real painting. The copies have little to no worth, while the unique can price millions.

Ownership history. People buy any kind of things that had been previously owned by celebrities. Why not NFTs?

Can somebody copy your NFT?

On the end of the article, I listed some of the costliest NFTs. Does this mean that I copied it?

Someone can copy an NFT just like any other piece of artwork. However the original NFT address will be traced back to the unique creator since all NFTs have a log of their transaction history.

Transaction history can’t be erased because is written in the blockchain. The worth in an NFT is not the image itself, but the specific piece of data.

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