What are NFTs and how do they work?

The year 2021 was critical for NFTs awareness: it was the year when non-fungible tokens (NFTs) were exposed to the general public, with trade volume exceeding $23 billion. This figure reflects a more than 200-fold rise over the previous year: according to DappRadar, the trading volume in 2020 will be $100 million.

Despite the fact that NFTs have been a hot issue for several years, there are many misconceptions regarding them.

To begin, it is vital to distinguish between fungible and non-fungible assets. A fungible asset is one whose units may readily be exchanged, such as money: if you have a $100 bill and someone borrows it from you, then gives you another $100 bill, everything is good. You don't need the exact identical $100 bill because every existing 100-dollar bill has the same qualities. Non-fungible assets, on the other hand, are treated differently. Because it has distinct qualities, it is non-fungible, which implies it cannot be interchanged. For example, if you have a Picasso painting in your living room, no one can steal it and replace it with another Picasso painting because, while both paintings are by Picasso, each one has unique features that cannot be duplicated.

A non-fungible token is a one-of-a-kind blockchain-based digital asset that relates to real-world assets such as digital art or music, as well as tokenized physical assets such as houses or cars. In this sense, NFTs are “one-of-a-kind” assets that may be bought and sold but have no physical presence. They have a distinguishing feature: they are unique and exclusive, which means they cannot be replaced, falsified, or even separated.

Operations involving NFTs are significantly less expensive, simpler, and faster than operations involving physical items across countries. As a result, an increasing number of platforms are being established to manufacture and sell NFTs, democratizing the collection and trading process. On Web3 markets, videos, artworks, animations, games, collectibles, and other assets are already tokenized and sold.

Looking at the NEAR ecosystem, it is possible to find several NFT projects, including but not limited to:

• Mintbase: NextGen Utility NFT Engine.

• Paras: NFT Marketplace for digital collectibles.

• Satori: A one-stop shop for top-tier artists who see the opportunity in crypto. They focus on delivering the value of NFTs and blockchain to artists.

How much can NFTs be worth？

NFTs are thriving, with NFT artwork routinely fetching millions of dollars at auction. “The First 5000 Days” by Beeple was the best-selling NFT in 2021, selling for $69.3 million. So far, the most expensive NFT sold in 2022 was “The Merge,” which cost $91.8 million and was created by digital creative Pak.

What is there to come？

Although the markets are still in their early stages and the majority of potential users are not yet interested in NFTs, the Web3 markets are blooming as several projects are developed by teams all over the world, and explosive growth is a foregone conclusion as the financial value and utility is coherently addressed to disruptive technologies and solutions, categories in which NFTs definitely fit.

As a reminder, WikiBit is ready to help you search the qualifications and reputation of projects in a bid to protect you from hidden dangers in this risky industry!