What is an NFT

What is an NFT and How Does it Work

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Non-Fungible Token or NFT digital assets are being talked about a lot. The reason is that the sale of NFT digital assets in 2021 has reached USD 24.9 billion. Really, what is NFT?

Recently, the research institute DeppRadar collected data on 10 blockchain providers to see the trend of digital asset sales in 2021. Based on the report, NFT digital asset sales in 2021 exceeded USD 24.9 billion.

This achievement is very high, considering last year’s sales figures were only USD 94.9 million. As reported from Reuters on Thursday (13/1/2022), the number of sales in 2021 could be more than the above amount, because off-chain sales or through auction houses are often not recorded by the data.

Similar results were also released by CyrptoSlam. They researched several blockchains and said that the sale of this crypto digital asset in 2021 reached USD 18.3 billion.

The market price of NFT art is quite volatile. For example, the average price of CryptoPunk images which was initially USD 100 thousand in July 2021, rose to USD 500 thousand in November 2021.

However, in December 2021, the price dropped to USD 350 thousand. As for the record for selling the most expensive asset in 2021, it falls on the artwork entitled “Every day’s – The First 5000 Days” by Mike Winkelmann.

The work of the American artist is a collage of 5,000 individual images that took more than 13 years to create.

Also Read: What is Metaverse and does how it work?

The work by Mike Winkelmann or Beeple will go up for auction in March 2021, at Christie’s auction house. The result Everdays – The First 5000 Days sold for USD 69.3 million.

What Is An NFT? Non-Fungible Tokens Explained

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With such large sales, many people are wondering what is an NFT asset?, the meaning of NFT is a digital asset that is a derivative product of crypto but is different from cryptocurrency.

The difference is that if cryptocurrency or cryptocurrency can be used as a means of payment transactions, NFT cannot. NFT is an asset that can be a collection or even an investment.

The forms vary from artwork, GIFs, music, virtual avatars, video game covers, shoe designs, videos, virtual land on the Metaverse, and other content uploaded on the internet.

These assets can be bought and sold online as well as offline, and are often sold for cryptocurrency payments. Usually, these assets can be stored on a blockchain, such as Ethereum, and sold on marketplaces such as OpenSea, Rarible, Foundation, as well as some auction houses.

So basically, NFT is a collector’s item but in digital form. For example, when buying a work of art, instead of the buyer getting the physical form of the work to display at home, the buyer gets a digital file and exclusive ownership rights.

Unfortunately investing in NFT is quite risky. According to the Chair of the Washington Technology Industry Association, Cascadia Blockchain Council and Managing Director of Yellow Umbrella Ventures, Arry Yu, NFT does not have a definite future.

“NFTs are at risk because their future is uncertain, and we don’t have much history to judge their performance yet,” he said.

For those who want to invest in NFT, it is recommended to invest in small amounts while observing the future value of the digital asset.

Also Read: How to Buy Virtual Land in Metaverse

“Since it is still very new, it might be worth investing a small amount to give it a try now.”

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