Knowledge base

What is NFT?

NFT is a unique digital asset that cannot be exchanged or replaced with another similar digital object, even though most tokens are usually interchangeable. NFTs also cannot be divided into parts, like Bitcoin or other cryptocurrencies.

What are NFTs used for?

NFTs, or non-fungible tokens, first appeared in the market in 2017. The Ethereum blockchain was the initial platform, but over time, such assets have been supported by other ecosystems (Cardano, Solana, Tezos).

Technically, NFTs are no different from more familiar cryptocurrencies and are records on the blockchain. The fundamental difference lies in the mission that this digital code carries. In the case of NFTs, it serves as a certificate that grants exclusive ownership rights to a unique finished product.

In simpler terms, when acquiring any NFT, the investor becomes the owner of an original digital artifact. It could be artwork, a photograph, a meme, a video, an audio file, an online game, an item in the Metaverse, or any other asset (even real, not virtual) that has market appeal.

Creative individuals convert their works into NFTs to, of course, earn from their subsequent token sales. But why do investors get involved in all of this? What motivates them to invest in non-traditional assets?

The thing is, NFTs guarantee the uniqueness of the product. When you buy such an item, you can be completely sure that you are the sole owner of the original copy. It's akin to buying a replica of the 'Mona Lisa.' There may be many copies in the world, but only yours will have truly significant value.

Furthermore, when purchasing a non-fungible token, the investor gains rights to further use the original copy. You can store it in your cryptocurrency wallet, just like any other digital asset, or put it up for auction to sell.

Today, there are many examples of NFT collectors fetching prices for their tokens that are several times higher than their initial cost. This indicates that this type of investment is quite promising. However, it's essential not to forget about the existing risks.

No one can guarantee that the NFT you bought for a few cents will skyrocket in the market at some point, allowing you to earn a fortune. The value of non-fungible tokens is not strongly influenced by market prices. Here, the primary price-determining factor is more likely the popularity and prominence of the project.