Non-fungible tokens (NFTs) seem to be everywhere these days. from picture art, video, and gifs almost anything in digital form can be turned into NFTs, "yeah I know right" so how do you get into creating NFTs. to do that you have to understand what NFT is. so let's do that.
What Are NFTs?
Non-fungible tokens (NFTs) are digital assets that depict real-world elements like art, music, in-game items, and videos. They're bought and traded online, often using cryptocurrency, and they're usually encoded with the same software as many other cryptos.
NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures.
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How Is NFT Different from Cryptocurrency?
NFTs are generally built using the same kind of programming as cryptocurrency, like Bitcoin or Ethereum, but that’s where the similarity ends.
NOTE: You don't need to know how to code or learn any programming language before creating NFTs.
Cryptocurrencies and physical money are both "fungible," meaning they may be traded or exchanged for one another.
They're also worth the same amount of money—one dollar is always worth another dollar and one Bitcoin is always worth another Bitcoin.
The fungibility of cryptocurrency makes it a secure way to execute blockchain transactions.
NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible).
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How Does an NFT Work?
NFTs are stored on a blockchain, which is a decentralized public ledger that keeps track of transactions.
Most people are familiar with blockchain as the underlying technology that allows cryptocurrencies to exist.
Specifically, NFTs are typically held on the Ethereum blockchain, although other blockchains support them as well.
An NFT is created, or “minted” from digital objects that represent both tangible and intangible items, such ass Graphic art, GIFs, Videos and sports highlights, Collectibles, Virtual avatars, video games skins, Designer sneakers, Music even tweets.
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What Are NFTs Used For?
Blockchain technology and NFTs afford artists and content creators a unique opportunity to monetize their wares. For example, artists no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can sell it directly to the consumer as an NFT, which also lets them keep more of the profits. In addition, artists can program in royalties so they’ll receive a percentage of sales whenever their art is sold to a new owner. This is an attractive feature as artists generally do not receive future proceeds after their art is first sold.
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Should You Buy NFTs Or Create NFTs?
Not everyone has the talent to create NFTs and not everyone has the money to buy NFTs although it's fairly simple to create NFTs, I will not advise anyone without the artistic talent to create NFTs but if you still want to do so for the fun vote up this post and leave me a comment and I will write another post on that.
Just because you can buy NFTs, does that mean you should? It depends, Yu says. “NFTs are risky because their future is uncertain, and we don’t yet have a lot of history to judge their performance,” she notes. “Since NFTs are so new, it may be worth investing small amounts to try it out for now.”
Investing in NFTs, in other words, is essentially a personal decision.
If you have some extra cash, it's something to think about, especially if the artwork has sentimental value for you.
However, keep in mind that the value of an NFT is solely determined by what someone else is prepared to pay for it.
As a result, rather than fundamental, technical, or economic indicators, which traditionally impact stock prices and, at the very least, constitute the basis for investor demand, demand will drive the price.
All this means is an NFT may resale for less than you bought for it. If no one wants it, you might not be able to resell it at all.
Capital gains taxes apply to NFTs, just like they do when you sell stocks at a profit. Because they're considered collectibles, they may not qualify for the lower long-term capital gains rates that stocks do, and they may even be taxed at a higher collectibles rate, though the IRS hasn't decided what NFTs are for tax purposes. Keep in mind that the cryptocurrencies you used to buy the NFT may be taxed if their value has increased since you bought them, so consult with a tax specialist before adding NFTs to your portfolio.
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