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16th February 2022 - By: Marc Luther Thomas

How NFTs work

How NFTs work

NFTs are a great opportunity to build communities, engage your audience and even earn passive income from their involvement with you. As scarcity of an NFT increases, so does its value. If you own an NFT which rises, you become part of the journey as you’re ultimately benefitting from your relationship with the creator/brand. So, let’s tell you a bit more about how NFTs work.

NFT projects are at least, if not more, about the creator and the roadmap for the audience journey, as they are about any token itself. Therefore, audience development and engagement is a critical part of success. This is why we’re so big on NFTs at Nifty – there’s no end of marketing potential in this innovative digital space. We’re already seeing some of the most recognisable brands coming up with creative ways of incorporating NFTs into their overall marketing strategy.

The beauty of NFTs is there’s so much more to them than being purely digital assets. From perks such as signed shirts to venue access, as well as lifetime benefits, tokens can provide a variety of material benefits which can grow in value themselves.

Thanks to the security of the blockchain – a shared ledger which records all transactions and ownership in the cryptocurrency and NFT space – NFTs have the potential to be the future of things like legal documents. All tokens are uniquely identified so, for example, if I was to transfer you NFT ‘A’, there’s no way I could get it again without you transferring that specific one back to me.

How NFTs work: Buying NFTs

NFTs are predominantly purchased using the cryptocurrency Ethereum, which can be acquired on crypto trading platforms such as Binance and Coinbase. You can then purchase a token from NFT marketplaces like OpenSea and Mintable, which will show the exchange rate of the amount of Ethereum the NFT is listed for.

You’ll need to consider gas fees when purchasing any NFT. These act like transaction fees on top of the token value, which users pay for buying, selling and even minting NFTs. The amount you’ll have to pay fluctuates depending on things like the complexity and volume of transfers that blockchain ‘miners’ are having to carry out at a given time. You can find out more about these here.

If you want more information about NFTs or are thinking about launching a project of your own, please feel free to contact the Nifty team.