NFTs Work

If you read about the financial market and cryptocurrencies regularly you may have come across the term NFT. NFTs have been hyped for about three years now, and yet, many people don´t exactly understand what they are and what they have to do with cryptocurrencies. At first glance, they seem to be some kind of arts investment. But as you learn more about NFTs and how it work, you´ll understand that they are part of the blockchain family.

What Is an NFT?

The acronym NFT stands for non-fungible tokens. Other than a cryptocurrency, an NFT token is individual and not interchangeable. Another important thing to note is that NFTs are not a cryptocurrency, even though they are based on blockchain technology. In fact, most NFTs are transferred via the Ethereum blockchain. Visit to learn more about non-fungibles.

An NFT is used for investments in digital creations. The value of the bought item is generated by the amount of the Ether tokens that have been transferred. It is obvious that digital art has reached a new level by indulging in the NFT business. Even big auction houses like Christie´s have started to implement the Ether payment method in order to allow for NFT investments.

How Is an NFT Different from a Cryptocurrency?

If you buy cryptocurrencies, their monetary value is transferred into your wallet. The coins per se remain on the blockchain, though. No coin is directly attached to a specific wallet or owner. If you make a transaction by using one of your keys, the blockchain uses the designated amount out of a pool of coins on the transfer block.

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Also, cryptocurrencies have their own value, which is designated by the market and by the buying behavior of investors. NFTs however do not hold a certain value, which is why you can use one token to purchase whatever piece of art you like. As NFT investments are usually converted in ETH, their actual value is created by the amount of Ether tokens going across the digital sales counter.

How Does an NFT Work?

NFT tokens are different from cryptocurrencies but also similar to them in some aspects. The field of NFT art however is a completely new one. This is how it works:

You can buy NFTs on a marketplace. By picking an item you like and making an offer or reacting to the asking price of the owner, you agree to send the correspondent amount of Ether tokens their way. The purchased item and the NFT are now connected. They save their value by staying attached to each other.

What Are NFTs Used for?

As mentioned before, NFTs are a very popular phenomenon in the art scene – in the new, digital art scene, that is. You can use non-fungible tokens in order to buy photos, collages, hashmasks. But NFTs also work for video games and the so-called DApps. CryptoKitties is one of the most well-known examples for that – investors purchase digital cats, which are each individual. The cats can be collected and even bread, which is how new collectibles are created for others to invest. If you still remember the times when collecting and trading baseball cards, you might be happy to hear that digital baseball or soccer cards are another huge NFT market. Other categories are digital identity, licenses and certificates.

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How to Buy NFTs?

In order to purchase NFTs, you will need to chose a blockchain platform. Even though Ethereum is the leading one when it comes to individualized tokens, others are starting to work with the technology as well. To many investors, it makes more sense to buy NFT tokens via the Ethereum blockchain, as most marketplaces for NFT arts don´t accept issuance by Binance or other blockchains yet.

Popular NFT Marketplaces

For digital fine arts, you can invest NFTs with auction house Christie´s. On the social platform SuperRare you can sell and buy items. It you prefer sports, use NBA Top Shot or Sorare for valuable collectibles.


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