How do NFTs work?
NFTs (non-fungible tokens) are digital assets that are stored and tracked on a blockchain. They are unique and cannot be exchanged for other assets on a one-to-one basis, like traditional currency. NFTs can represent a wide range of digital assets, including such as art, hologram, domain name, music, game, fashion, ticketing, metaverse, Ai art, collectibles, videos, virtual real estate and other types of media.
Here is a general overview of how NFTs work:
1. Creation:
NFTs are typically created using a smart contract, which is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The smart contract specifies the details of the NFT, such as its unique identifier, metadata, and any other relevant information
2. Minting:
After the NFT is created, it is "minted" by adding it to the blockchain. This typically requires the use of a cryptocurrency, such as Ethereum, to pay for the cost of the transaction and any fees.
3. Storage:
NFTs are typically stored in a cryptocurrency wallet, such as MetaMask, Trezor One, Ledger Nano or Exodus. These wallets allow you to store and manage your NFTs as well as other cryptocurrencies.
4. Transfer:
NFTs can be bought and sold on a marketplace or platform that supports NFT transactions. When an NFT is sold, the ownership is transferred from the seller to the buyer, and the NFT is transferred to the buyer's wallet.
5. Tracking:
The blockchain provides a secure and decentralized way to track the ownership and provenance of an NFT. This means that the ownership and history of an NFT can be verifiably traced.
Overall, NFTs work by using blockchain technology to authenticate and track the ownership of digital assets in a secure and decentralized manner. This allows NFTs to be bought and sold without the need for a central authority and allows the value of an NFT to be determined by market demand.