April 22 2022
What is NFT technology? How can you make money on NFTs? Why is it so popular now in 2022.
What is NFT?
NFT is a non-fungible token, a non-fungible token, unlike conventional fiat money, where each bill of the same denomination can be replaced by another, or any cryptocurrency can be replaced by another of the same type and denomination.
A non-fungible token is the uniqueness of each unit of a digital asset that is stored in a common data store - blockchain.
- A simple example of two paintings by different artists Rembrandt and Picasso, in fact, the essence is the same both there and there, but the value of them is different depending on many factors, as well as different paintings by the same artist.
- In computer games, these can be different skins of game characters
- In the adult industry, these can be unique photos of an idol
- This can be a photo or GIF of memes if you are the author
- It can be 3d graphics or video
- It could be collectible baseball or football player cards that are no longer for sale.
- There may be photos of rare coins or postage stamps
History of NFT
The emergence of NFTs is closely related to the emergence of smart contracts, that is, when acquiring ownership of a digital entity, it is immediately confirmed to all participants in the blockchain (data storage).
Blockchain is a large storage of digital data that is stored on each of the computers that are included there, that is, in fact, your ownership of a digital asset is confirmed immediately by all network participants.
Despite the fact that the technology of blockchain and cryptocurrencies is relatively not new, NFT began to gain popularity in 2021 and at the beginning of the journey was closely associated with games Tamagotchi, which were popular in the mid-90s.
The main purpose of buying such tokens is the uniqueness and collection of cat characters, as well as their involvement in the gameplay.
The game has become very popular and at the moment the cost of one character can exceed $100,000.
Also, the emergence of this technology is due to the development of the blockchain technology itself, especially based on Etherium.
If at the beginning of the journey this technology was more of a gaming one and developed with the help of revangelists (people who believed in this technology), then in 2021 Elon Max, Banksy, Paris Hilton began to actively use it, which also led to the popularization of this type of information assets.
NFT technology and its future
How the technology works - there are sites that provide a service for issuing the sale and accounting of NFT tokens, among the well-known ones are OpenSea, Rarible, Niftygateway and SuperRare services.
You need to link your digital wallet to such a resource and you can already start issuing or buying these tokens. At the same time, the technology works in certain blockchains and uses only those wallets that support work in this blockchain, this information can be read on each of these resources.
At the same time, these blockchains are not interconnected, that is, by buying a token in one of them, in theory, the same token can be bought on another blockchain and both you and the other buyer will have the right to own it, but in different blockchain services.
At the same time, it is still worth saying that the service itself performs the check of the uniqueness of the resource being sold, so there can be no complete identity of the tokens.
It is possible to buy or sell this digital asset, but it can only be used within the blockchain, meaning you do not acquire ownership of it. And you are allowed to perform with it only those functions that the issuing author of this token himself predetermined - buying and selling.
Blockchains that store NFT tokens
This technology works on the standards (Set of software rules) working with this technology are Ethereum ERC-721 and the newer standard ERC-1155
At the time of this writing in 2022, the blockchains that support NFT technology are:
- Ethereum blockchain
- Klatyn (KLAY)
That is, the Opensea service itself does not have its own developed blockchain, but uses the technology of existing blockchains.
Crypto wallets that work with these tokens
Accordingly, for work you will need special crypto-currency wallets
How can you make money on NFTs?
At the moment, the technology is just beginning to gain popularity, so there are still many questions about it, and about the potential earnings on this type of investment. It should be taken into account that such a digital asset is very risky in terms of investment and so far it is not necessary to consider it for the formation of an investment portfolio.
But you can try to issue a few of your tokens for the experiment and try to sell them, it’s also not even necessary to sell, you can just issue digital tokens not for sale and test the entire chain. Especially if you are an artist, illustrator, musician, media personality with a loyal fan base, influencers
Key questions for this technology:
Considering that a digital asset is not material, how will its future value added be formed?
In fact, the cost of this asset is the cost of the ethereum that is paid for it, with the growth of the ethereum rate, it will cost more and such an asset in terms of ordinary money, but will there be an opportunity and interest in a potential future buyer in acquiring it, it would be easier to keep the funds in the Ethereum or other cryptocurrencies?
In general, the liquidity of such an asset is a big question.
Ownership of such an asset exists only within the blockchain that is tied to the service where you generate it, what technology can be used to check and delete the same asset in another blockchain of another service?
What legislation regulates the NFT buy-sell market?
Who can make money on NFTs?
According to the author, at the time of writing this article in 2022, they can try to make money:
- Representatives of the adult industry
- Media faces
- Stamp collectors
How to create a popular token?
There is no single recipe for how to get rich, create a viral video or become famous. All ideas need to be tested and decisions about its maturity should be made along the way.
But certain recommendations can be given, for testing, try to take a picture and make tokens that you used to collect something and you have in stock
- Collections of TURBO chewing gum wrappers
- Different brands especially old ones
- Collection of caps Mortal Kombat
- Coins are especially rare
- Photographs professionally edited of famous places that are of cultural or historical value.
Conclusions: NFT is a new technology and it is not necessary to consider it as an investment strategy for making money. The future development of this technology will be associated with the development of the blockchain itself as a tool for storing unique records in a single registry, for example, when buying real estate, a record of ownership and so on.
At the moment, you can test it by issuing a few of your tokens and figure out how this system works. So far, 95% of the users of this technology are gamers and the remaining 5% are famous people who can sell whatever they want in the form of an NFT token.