Do you want to buy NFT? Here is what you know

The main risk of buying any cryptocurrency, including NFTs, is that value is largely based on profitability. Buyers are hoping that in the future their NFTs will gather without a guarantee.

If you are thinking of buying an NFT, here are a few key things to know.

What is NFT?

NFT can be music, art, trading cards and even tweets.

Kings of Leon released their latest album as an NFT collector earlier this month. The token is the certificate that guarantees that the record is genuine and original.

Mike Winkelmann, a graphic designer professionally known as Beeple, has taken to the Nifty Gateway online marketplace to sell millions of dollars of his digital art to wealthy collectors. On Thursday, it sold a digital collage at Christie’s for $ 69.3 million.

Artist and musician Claire Boucher, known as Grimes, has sold $ 6 million worth of NFTs, also on Nifty Gateway.

But not all NFTs are condensed. They can also be items for in-game purchases, event tickets and domain names. For example, some Kings of Leon NFTs will also be future concert tickets.

What do I get when I buy NFT?

When buyers purchase an NFT, they own the original rights to their digital assets, whether that be music or images. This is proven in two ways: The buyer receives the same token legacy property, and each NFT is uploaded to a digital ledger (like cryptocurrencies) to track when it was created and sold as well as owned.

Much of the value comes from the pride and ability of people to say they have an original job, said Dan Kelly, president of Nonfungible.com. “Ownership is the key,” said Mr Kelly. “It’s the status quo of having that thing. It’s completely different with the first one compared to the replica. ”

One of the main obstacles for people thinking about buying NFTs is “for many people there is a perception that the physical version of a collector is in some way more valuable than the form. digital, ”said Andrei Brasoveanu, a partner at Accel who recently invested in Sorare, an NFT platform for football fans. He says NFTs are often more secure because of their authentication process. For NFTs on Sorare, this is on the ethereum network. Unlike bitcoin blockchain, ethereum is the platform on which many NFTs are created because of how flexible it is for developers to store code for blockchain projects.

Are there other versions? What makes an original NFT?

Only the NFT buyer owns the rights to the original asset, although other copies may still be floating around the internet for free.

Mr Kelly compares this to ownership of the original Mona Lisa and the number of reactions that go around. There is only one person who owns the original one, he said.

Each token is based on a unique blockchain. NFTs have metadata that determines when they were made, who created them and other descriptions. This information is combined with a cryptographic hash function – a technique that converts the data into a unique set of 40 digits and numbers – creating a unique identity. So even if thousands of NFTs are sold with digital images that look similar to each other, all the basic information will be different.

Ownership rights on NFTs are details that are still issued in the US Currently, when a person acquires an NFT, it belongs to the underlying asset, but it does not. the copyright.

If the buyer wanted all rights to a collector, the copyright holder would have to transfer the copyright separately by contract, said Ali Dhanani, an intellectual property lawyer at Baker Botts. Furthermore, “the copyright maker may use, display, distribute or create reprints of the work, including the generation of new NFTs for the those reprints, ”he said.

How much will they cost?

While some have sold for as little as a few dollars, other high-end digital art pieces have sold for millions at auction.

A meme called Nyan Cat, which shows a cat with a Pop-Tart body, was purchased for nearly $ 600,000. Kings of Leon NFT records sold for $ 50.

Top Shot at NBA allows sports fans to officially buy, sell and collect video footage of basketball players. One man spent more than $ 175,000 on digital trading cards; they are now worth $ 20 million.

Where are the right places to buy NFTs?

There are online marketplaces for buyers to participate in auctions, make purchases and sell NFTs. Some of the most popular include OpenSea, Nifty Gateway, Yellowheart and NBA Top Shot.

NFTs can be resold on the same online markets.

Mr Kelly suggests that newcomers continue to buy on major market sites directly from the retailer. Authentication on high school sites will be more difficult if you are not so familiar with the process of buying and selling NFTs.

Are there scams and risks to be aware of?

Even on the most relevant market sites, there are scams. The best way to deal with this is to buy from reputable retailers, Mr Kelly said. He also suggests treating it as someone trading in the stock market would.

“If you don’t have experience, make sure you don’t spend more than you’re willing to lose, and stick to the usual ‘blue chip’ stuff,” he said.

—Caitlin Ostroff added to this article.

Write to Amber Burton at [email protected]