What is NFT?

NFT is a unique digital asset that cannot be copied, substituted, or replaced with another similar digital object although usually, all tokens are fungible. What is more, NFT cannot be divided into parts, like bitcoin or another cryptocurrency.

What is NFT and how does it work?

NFT, or non-fungible tokens, appeared in the market in 2017 on the Ethereum blockchain. Over time, they became available in other ecosystems such as Cardano, Solana, and Tezos.

Technically, NFTs do not differ from cryptocurrencies. It is a cryptographic asset that sits on the blockchain. The fundamental difference is the digital code of this asset. NFT is essentially a unique certificate of ownership that points to a particular digital product.

In other words, by acquiring any NFT, the investor becomes the owner of the original digital artwork or an asset, e.g. painting, a photograph, a meme, a video, an audio file, an online game, an object in the Metaverse, or any other asset (not even virtual, but real) that is of high demand in the market.

Many artists convert their works into NFT in order to make money on the subsequent sale of the token. Why are investors interested in these assets? What motivates them to invest in NFTs?

The fact is that NFT has a unique identifier that distinguishes it from other NFTs. This uniqueness is guaranteed by the blockchain. By purchasing such a product, you can be completely sure that you become the sole owner of the original copy. It's akin to buying the original Mona Lisa. There are many copies in the world but only your painting will have really great value.

Besides, when buying a non-fungible token, the investor receives the right to use the original copy. You can store it in your crypto wallet like any other digital asset, or put it up for auction to sell.

There are many examples when NFT collectors managed to reap a profit for a token several times higher than its original cost. This suggests that this type of investment is quite promising. However, do not forget about the risks.

No one can guarantee that the NFT you bought for a few cents will soar in value after some time and you will be able to earn a million-dollar fortune. The cost of non-fungible tokens does not depend much on market exchange rates. Here, the main price-forming factor is the popularity and promotion of the project.