What is NFT: The Possibilities of NFT And The Difference Between Crypto Assets

By Mike Reiss- Jan 06, 2023 36

"How do NFTs work?" "Why are NFTs gaining attention?" 

NFTs are still attracting a lot of attention in 2022, and stocks related to NFTs are on the rise. 

NFTs are non-fungible tokens and are used in various fields such as industry and games because they can prove their unique value. 

For those who have doubts, in this article, we will thoroughly explain the technology and process of NFT. We have extensively explained the information about this NFT, so please see the end! 

What are NFTs?

NFT is an acronym for "Non-Fungible Token", and it means it is a token that cannot be replaced. 

A simple explanation of non-substitutability is "one and only". 

It is a process that uses blockchain technology to record data on the owner and creator of digital content to prove its uniqueness. 

Until now, digital data can be illegally downloaded or duplicated by anyone, making it difficult to protect the quality of the original data. But, by converting the digital content into NFT and linking it to a blockchain, it is possible to prove that it is unique. 

A token is a crypto asset issued on a blockchain.


Blockchain features and benefits 

Technologies like blockchain decentralization, transparency, data management, non-falsification, and traceability are used in NFT. 

The value of digital assets is recorded on the blockchain. And it is characterized by semi-permanent storage of resources even after the platform or game ends. Also, through smart contract technology, even if the NFT is distributed twice, a portion of the profit will be returned to the creator.


Relationship with Ethereum 

NFTs are traded mostly on the Ethereum blockchain. 

Ethereum is both a virtual currency and a platform for decentralized applications. Since NFT art and games are operated using the Ethereum platform, Ethereum (ETH) is often used for transactions.


Difference between NFT and Crypto Assets

We explained that NFT is a non-fungible token, a crypto asset issued on a blockchain that cannot be replaced. So, it is not exactly the same as crypto assets like Bitcoin (BTC) and Ethereum (ETH). 

Crypto assets can be exchanged for other crypto assets and cash, and can be used as currency. 

On the other hand, NFT cannot be directly used as currency or points but it is data that can prove its unique value. But, since this data itself can have resource value, it means that you can earn resources through NFT art and NFT games.


NFT Technology and Process

The technology and process of NFT are as follows.


Blockchain proves uniqueness

As explained, the uniqueness of NFT is proven by blockchain. 

NFT data has the characteristic that it cannot be replaced and issues like fraud and forgery do not occur. 

With this feature, the items you find in the NFT game become unique content and you can earn while playing the game by buying and selling items. 

Also in art and sports, NFTs can be used to revitalize various businesses.


Could go up in value

Bitcoin (BTC) has the same value regardless of who owns it, but NFTs can record owner information and are unique and immutable, so their value can increase. 

Last year the total sales of NFTs for 2021 was about 25 billion dollars (about 2.9 trillion), and it is expected that this trend will accelerate in the future. 

The fields in which NFTs are used have expanded from early photos and videos and are now being traded in the metaverse and prices are skyrocketing. 

NFT content may increase in value in the future, so you may want to focus on it as an investment target.


Anyone can buy and sell

NFTs are crypto assets called tokens, so anyone can buy and sell them. 

With this feature, anyone can convert their digital content into NFT and sell it to earn money. In the NFT industry, you can buy and sell various content like images, videos, music, and Twitter posts. 

In the NFT game field, it is possible to buy and sell in-game items and characters and trade in-game land such as real estate. 

This ability to trade freely has encouraged many artists and content creators to enter NFTs. And at the same time, the number of people who can make money from NFTs is also increasing.


Background of NFT's attention

Looking back at the backdrop of NFT attention, the presence of the NFT industry trading at high valuations is noteworthy. 

NFT art is digital content such as music, video, and images that have been converted into NFT, and any content that can be uploaded to the Internet can be converted into NFT. 

Among the NFT arts, is a Twitter tweet by a certain person famous for trading at high prices. That person was the first tweet ever posted by Twitter founder Jack Dorsey, and it sold at an auction for nearly $300 million. 

Also, there are many examples of high-value transactions, such as NFT art by an American artist named Beeple that sold for nearly $29 million.  

At first, the works of individual artists were prominent, but now luxury fashion brands like Louis Vuitton, Prada, and Cartier are entering the NFT art market. As the future of NFT is still there, various companies have started entering the market one after another regardless of domestic and foreign sectors.


Issues and problems of NFT

There are two issues and problems with NFT.


Copyright issues

We explained that NFTs are non-fungible tokens that can prove their uniqueness, but in fact, NFTs also have copyright issues. 

In other words, NFT cannot confirm the identity of the work and the author. In other words, if pre-transcribed content is sold as original content on the NFT platform, that content is proven to be unique. 

Additionally, there is a problem in that the uniqueness of the work is lost when the author sells the same work as NFT on other platforms. In other words, art copyright and NFT ownership are two different things, which can lead to copyright issues. 

The advantage that anyone can freely create and sell and make money is a disadvantage that encourages copyright infringement


Issue of fees

Apart from copyright, another big problem is high fees. 

NFT transaction fees are called gas fees and are incurred when transactions use the Ethereum blockchain. Specifically, a person involved in a blockchain transaction is called a miner who performs the task of processing the transaction, and the gas fee is a fee for mining. 

There is also the problem that the price of this gas will increase if the number of NFT transactions increases. 

If the NFT market expands and the number of users buying and selling NFT increases, gas prices may rise further in the future. To reduce gas costs, check current gas prices, slow down processing, or use an exchange for lower gas prices.


How to purchase NFTs

The procedure for purchasing NFT instruments is as follows. I will explain the case of trading with line NFTs as an example. 

1.     Open an account on a virtual currency exchange: Since the NFT market deals in virtual currencies, first, open an account on the exchange.

2.     Create a wallet: Next, create a wallet that manages virtual currency funds.

3.     Deposit virtual currency from the exchange to the wallet

4.     Log in to NFT Market

5.     Buy NFT products



This time, we have explained the process of NFT from various points such as the relationship with blockchain technology, Ethereum, and the background of attracting attention. 

NFTs are used in various fields such as industry and games, and many companies are now entering the scene. 

It's not too late for those who want to make money buying NFTs, so please use this article as a reference!