It’s a term you have probably heard by now maybe from your friends, family or hot-shot celebrities that you follow on social media.
NFTs have exploded in popularity during the pandemic, leading many investors to wonder how to buy them.
Artists, collectors, and speculators alike have flocked to the movement as cryptocurrencies and other digital assets have skyrocketed in price.
Just like Crypto, NFTs is still a new term to many especially in Kenya and Africa in general. That doesn’t mean we should shy away from it when it comes to investing.
NFT stands for non-fungible token.
Let’s start at the very beginning—what does non-fungible mean? “Fungible” is an economic term that refers to a good or asset that can be exchanged for another good or asset of equal value. For instance, a shilling is fungible, because it can easily be swapped for another shilling of the exact same value.
If something is “non-fungible,” it means it can’t be swapped for something of completely equal value. A tract of land would be non-fungible, since land is unique, and finding another tract with the exact same value would be difficult to impossible. Art is another example of a non-fungible asset, since its value is highly subjective—and this is where NFT’s come in.
An NFT shows exclusive ownership of a particular digital asset (e.g., a piece of art, an in-game purchase, or a tweet). You might purchase an NFT at a certain price, but because it’s non-fungible, its market value is likely to fluctuate.
How do NFTs work? Are they cryptocurrency?
While NFTs are often bought and sold using cryptocurrencies such as Bitcoin and Ethereum, they are not cryptocurrencies themselves. Like dollars and other currencies, cryptocurrencies are fungible. If you trade one bitcoin for another bitcoin, they both have the same value. You’ll still be left with one bitcoin. Since NFTs are unique, they have no equivalent value other than what the market is willing to pay for it.
What do you get when you buy an NFT?
Since an NFT can only have one owner at any one time, when you buy an NFT, you purchase the exclusive ownership of a particular digital asset. However, this doesn’t mean that you own the exclusive rights as to who gets to look at or share that particular artwork.
In the past, investing in art has traditionally been the reserve of the upper-classes who can afford to invest in something that is likely to lose value. Crypto art could provide a way for those with less capital to invest in works.
For investors looking to cash in on those trends, several cryptocurrencies fit the bill perfectly.
Where can you buy NFTs?
You can buy NFTs anywhere in the world not just in Kenya. But before making this step, you need to understand virtual currency space and how it operates. We encourage you to get an expert so that you don’t get scammed.
To buy an NFT you must change your money into a digital currency like Bitcoin or Ether. Ether, which is a property of the Etherium which describes itself as a “community-run technology powering the cryptocurrency ether (ETH) and thousands of decentralized applications.”
To buy ether (ETH) you will need a cryptocurrency wallet that supports it. The wallet differs from the account you hold with a platform where you may buy or trade in cryptocurrency.
OpenSea found instances of insider training among staff
Some platforms that allow users to purchase NFTs include OpenSea, Rarible, SuperRare, and Mintable.
OpenSea is the largest NFT marketplace and has a deeper connection to Etherium than any other platform.
The new rules prohibit any OpenSea worker from buying or selling “from collections or creators while we are featuring or promoting them (e.g. on our home page)” and ensures that workers cannot use “confidential information to purchase or sell any NFTs, whether available on the OpenSea platform or not.”
Is It Safe To Buy NFT?
It is important to understand that the value of NFT will be based on what someone is offering to pay for it. Demand will drive prices. All that being clear, one should consider buying an NFT after proper research as it is with any other form of investment.
The hope is that the value of NFT’s will rise over time, meaning those buying these digital photos can re-sell them in the future at a higher price. However, based on how the cryptocurrency market has been acting lately, NFTs could be a disaster waiting to happen.