Blockchain, the decentralized ledger technology that powers Bitcoin and other cryptocurrencies, has found rich uses in a wide range of industries. From education, fintech, and governance, to logistics, healthcare, IoT, and more, blockchain technology is revolutionizing the way the world works.
A new blockchain-based technology called non-fungible tokens (NFTs) has recently gained considerable traction in the crypto space. NFTs have the power to convert anything from images and video to tweets and more to tradable, blockchain-secured digital assets.
In this article, you can find all about NFT trading, how it works, and the potential it has for creating new value creation streams.
What is an NFT?
The term “fungible” means tradable, like for like. A dollar bill can be replaced by another dollar bill, and an ounce of gold, a physical commodity, or shares in a business can all be replaced by like specimens of the same. Reprints of a picture or a video can also be reproduced.
However, there is still always only one original artwork that is reproduced, and ownership of that original is very valuable, just as the ownership of a rare painting is worth millions. Similarly, a digital sports trading card, the first release of a product, domain names, and digital collectibles of other sorts such as digital art, images, or videos are all unique in their own ways and are, therefore ‘non-fungible’. There is no duplicate of these items. We can, however, record the ownership of these unique items in a secure, transparent, unchangeable ledger - the blockchain - and that is what NFTs represent.
As per studies, the market cap of NFTs witnessed a rapid, ten-fold growth between the years 2018-2020. This provides a distinct indication of the expected rise of NFTs in the coming years.
Trading these tokens can be quickly done with the help of a dedicated marketplace where you sell your assets and earn cryptocurrency in exchange, such as OpenSea and Rarible.
There are multiple ways through which you can become a part of the NFT trade, which we outline as follows.
You can purchase an NFT on any NFT trading platform of your choice. New content and collectibles are added every day, some of which can achieve viral popularity, accompanied by significant growth in value.
NFTs bought and sold on marketplaces are paid for in specific base currencies, such as Ethereum. Although the market has since stabilized, the explosion of popularity of NFTs seen earlier this year was accompanied by a rise in demand for ETH tokens. High-profile NFT sales can fetch hundreds of thousands and even millions of dollars in bids, all paid for in ETH, so purchasing ETH (or another applicable base token) before unique releases can lead to capital gains.
Yet another way to strike it rich through the NFT trade is by creating your own NFTs and selling them in a marketplace. This is by far the most fundamental option with lower dependencies on other assets.
Selling your digital asset requires the knowledge of NFT transferring, which is compliant with the standard templates provided. The creation of these tokens can be anything you like and requires no special know-how.
The growth of the flourishing NFT domain is attributed to the global acceptance welcoming it. Multiple brands have opted to contribute to the NFT trade that lets them kill two birds with one stone: Increase their brand reach and generate another source of income.
Supporting a social cause through its NFTs, Taco Bell also commenced its journey into the domain and sold 25 NFT GIFs over the marketplace. The news-breaking Grimes Videos made close to $5.8 million from its collection of 10 auctioned NFTs.
NFTs have been instrumental in changing the fundamental market dynamics with its prominent features, including enhanced artistic royalties and lesser third-party costs.
As mentioned above, one way to participate in NFT trading is by investing in base currencies used to pay for NFTs, or by purchasing or selling an NFT of your own. To buy an NFT, you will require crypto tokens. If you successfully sell an NFT, you will need a way to cash out your payment, which you can do by converting it into fiat or by converting it into another token. You can also invest your earnings or use them for goods and services.
Wisebitcoin can help you with this. Our user-friendly cryptocurrency exchange is networked with 280 exchanges across the globe. With its 50 cryptocurrencies for spot trading, it has features suitable for both beginners and expert traders. We are one of the exchanges that offer a secure trade in the volatile crypto market, and we can help you obtain crypto tokens for purchasing NFTs and we can also help you withdraw your crypto funds from an NFT marketplace for use elsewhere.
Visit our website here and start your trading journey with us!