UNDERSTANDING HOW NFTS WORK: If you’ve been paying attention to the cryptocurrency space lately, you must have heard folks talking about “NFTs.” Although Bitcoin and other cryptocurrencies have been making waves globally, NFTs might be the next big thing if more people know how it works. There has been news of digital assets and artworks being auctioned at millions of dollars through NFTs, which has caused more people to pay attention. For this reason, more people are asking the question, “What are NFT and how do they work?”

In this article, the basis of NFT, how they work, and most importantly, how to gain profits from them are discussed in concise detail.


NFT is an acronym for Non-fungible tokens. The usual confusion about NFTs is in the word “fungible” because it is not a word that is used often by people. However, fungible means interchangeable, while non-fungible means non-interchangeable.

In finances, fungible assets are local currencies, gold, shares, and cryptocurrencies that are not NFTs. For example, Bitcoin is a fungible token, meaning that you can only trade Bitcoin for another Bitcoin (not other cryptocurrencies) without losing or gaining value. Fungible assets can be used in several ways and still yield the same result.

NFTs are digital assets on a blockchain digital ledger. Most NFTs are a part of the Ethereum blockchain. Like Bitcoin, Ethereum is also a cryptocurrency. It supports NFTs and stores extra information that differentiates them from typical cryptocurrencies.

NFTs are distinguished from each other by having unique identification codes and metadata. Unlike fungible assets, you cannot trade NFTs at equivalency, nor can they be used as a medium for commercial payments.

NFTs have often been called “certificate of authenticity” because they represent digital assets’ uniqueness. Hence, NFTs can never be adjusted, changed, or stolen because it uses solid cryptographic technology.


Do NFTs have value?                                                                                                 

The answer is yes! All NFTs have value because they are digitals that are collectibles and might increase in value in the future. They can be bought using Ethereum on online NFT marketplaces like OpenSea, Binance NFTRarible, and SuperRare. The first step is to own Ethereum coins and store them in a digital wallet.

Some examples of NFTs include digital artworks, real estate, digital and non-digital collectibles, event tickets, domain names, fashion items, game Avatars, and so on. Some notable NFT sales include;

How to create NFTs

NFTs are most alluring to musicians, filmmakers, writers, and fashion trendsetters. NFTs, help creators protect the authenticity of their works while monetizing them. As a creator, you can turn your digital asset into an NFT through a process called “mint” and then sell it on an NFT marketplace. Follow the steps written below to create your NFT.

  • Find an online NFT marketplace.
  • Fund your ethereum crypto wallet to cater to computing fees.
  • Click on “create” on the NFT marketplace and upload your work in the space provided.
  • You can list the NFT for either a fixed-price sale or sales via auction.

Investing in NFTs

Since NFTs came into the limelight in the crypto space, there have been questions surrounding their investment returns capabilities. The group of people that would benefit from NFTs are the creators and sellers of digital assets, but when it comes to investing by buying the assets as collectibles, it becomes a slippery slope. Hence, the answer to the question, “Are NFTs the right investment option for me?” is yes and no because their values are unpredictable. Like other cryptocurrencies, NFTs increase and decrease in value in real-time based on the demand for the digital asset.

However, if you can identify new NFTs immediately after they are introduced into the market, it might pay off in the future. Some digital artworks have been sold for meager prices initially but increased in value after a while.

Before investing in NFTs, there are some things you should consider, and they include;

  • The creator of the NFT.
  • The uniqueness of the piece.
  • The history of the asset’s owner.
  • The ability of the asset to generate income.
  • The risk involved.


NFTs are still very new and might take some time before it becomes a lucrative venture in the tech world. So, tread carefully before investing and always consider the risks. You can diversify your investment plan by investing in other cryptocurrencies and stocks of companies participating in blockchain technology. That way, your investment portfolio will be in the right shape.

For more information on how to trade NFTs, visit croft financial.

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