NFT - Non-Fungible Token.
Nft is known as a Non-Fungible Token. They can be refer to as a digital painting which when bought gives you the ownership right to the painting. Non-fungible means something that cannot be changed whenever it is created and must be distinguishable. For example 1 etherum is same as 1Eth, but for NFT they are practically different. People buy NFT because they see it as collectibles in the investment category. Few main reasons why NFTs become valuable are:
First: Just like the way Bitcoin was the first cryptocurrencies which became popular and has gained so much value over the years, the first NFT of specific creators also will gain value. E.g The most expensive cards of polkimon cards are the one created in the 1st edition. If an art is the first of its kind, it is bound to gain value.
Utility: The real world benefits of NFT also makes it valuable. Say for example, an artist can create a limited number of NFT to sell to a certain number of fans (the scarcity and rarity of NFT gives it value) as a life time access to any future shows that might be performed.
Rarity: The value of an NFT is most importantly hinged on it rarity or uniqueness. Remember the MONALISA. Only one person can have the real painting made by Leonardo Davinci, while any other copy is a duplicate. Same goes for digital assets like NFT. Once you own the original copy of an art or asset, it naturally accrues value as you alone own the right of ownership. This gives the holder right to sell at an intended amount to any bidder who may want it at all cost.
Ownership History: This is one criterion that can also make an NFT gain value. To collect a material once owned by a celebrity might be of great value. For example; having access or owning a picture of Donald Trump’s dog (former president of the US) might be worth some value if no one else has it.
Digital Identity: This is the most recently developed use of the NFT assets. The crave to dissociate the real identity from the digital identity is currently what has moved and continously sustained the NFT market. A typical example of this was the Bored Ape NFT art sold at an exorbitant price. It was rumored that the NFT series were bought by some set of millionaire associate who typically needed it has a digital identity for the online millionaire's club. Crazy right? You probably also must have seen pictures of other NFTs like the Cryto-punks and other digital assets being used as profile picture across social media channels. The digital space is about transitioning to a larger space with the advent of the Web3. NFTs aren’t left behind as this would drive the growth even more.
How to Buy NFTs.
You can buy NFTs in a centralized marketplaces e.g Nifty Gateway owned by Gemini or in a decentralized marketplace like Opensea, Rarible and SuperRare. However, there are bidding options available as well. Note that NFTs are not very liquid, that is they don’t always have a market of people who wants to buy them. It is currently hype driven.
Use Case of NFTs
Over time there has been some creative uses of NFT that has improved it popularity and investments. Some uses of NFTs are:
Display at Art Galleries
Use of digital frame to display NFT.
Physical prints of NFT with a QR code next to it pointing to the proof of ownership on the blockchain
Display at Online gallaries. For example, NFTs can be used for display in the virtual worlds (most use in Gamefi projects)
They can also be used as collateral in Defi.