What are NFTs – Non-Fungible-Token
Before understanding NFTs, let's see what are fungible token. Fungible means replaceable by an identical item. Let’s take the example of currency note, 1 dollar note can be exchanged with another one dollar note irrespective of their currency numbers. NFTs are opposite of that, it is a collectible that cannot be exchanged with an identical one because each one is unique. In technical term, every token you own, has a unique token id.
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What are the use cases of NFTs
NFTs usually follow the same standard on which we can build different types of use cases. One of the popular NFTs are profile picture NFTs such as Bored Ape Yacht Club (BAYC).
- Some use NFTs as tickets for events like online conferences, meetings, etc.
- It is also used as an early access pass for events.
- NFTs are also used for gated communities. There is a community called metaverse HQ, where if you need to be a part of that community you need to hold one of community NFTs.
- NFTs are used in Proof of Attendance. It is used to represent your attendance at a particular event.
- It is also used as a proof of completion which can be considered as certificates for completion of any course or anything.
How to create an NFT
Usually, it can be created with code editor and you need to have some Ether in your crypto wallet.
If you are not a coder, then there are platforms like Opensea and Rarible. Here we have two cases, we can create NFTs with your own contract or with either Opensea or Rarible contract. This will reduce the gas cost but you will maintain the NFT in your contract. If you are planning to make a collection then using your own contract would be a better option. By selecting this option, you would be charged high.
Why NFTs are so expensive
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It is basically depending on use cases and it is subjective. The early stage of NFTs was compared with art. It was meant for collection of items. The price of proof of attendance would not be the same as the price of NFTs of gated communities. So, depending upon the use cases the value of NFTs varies.
How to buy and Flip NFTs
Before flipping an NFT, proper investigation is important because there are some fake resale values being created to increase the sale. Not all the NFTs, but some NFTs do so. Beware of this fake promotion and invest with caution.
Secondary market is way cheaper than the primary market. Some people will start flipping their NFTs within few hours of purchase. So, purchasing at that time would be a better option in terms of both gas fee and also cheaper compared to the price on which it was brought. Whenever you are flipping NFTs make sure that you consider the gas fee which will be high if you are going to buy it from the first seller.
Future of NFTs
NFTs have a very bright future. Still NFTs have a lot of use cases that are not still in practice. It has a lot more potential than just being a collectible. Building application on top of NFTs would be done better in the future.