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Non-fungible tokens or NFTs: What are they, where to buy and should you spend money on them this Dhanteras

 

Non-fungible tokens or NFTs are undoubtedly one of the hottest crypto assets in the market. With celebrities including Amitabh Bachhan, Vishal Malhotra, Sunny Leone and others launching their own NFTs, these digital assets are slowly making their ground in the Indian market. While the crypto craze has already taken over the minds of millennials and GenZs in the country, the NFT market is relatively small. Somewhere in the news, you must have seen these tokens selling for ridiculous amounts of money. So should you be buying NFT this Dhanteras instead of gold? This explainer below might help you out.

What is an NFT

In simple words, an NFT is a one-of-a-kind digital collectible. This means it is unique and can’t be replaced. These virtual tokens can be songs, movies, artworks, photographs, social media posts, GIFs and anything else that can be stored digitally. Now you may be thinking how these tokens are unique? Well, that is where the non-fungible part comes in. Yes, anyone can copy what is there in the NFT but any imitation of the token will miss out on the unique properties. For example, there are millions of copies of Leonardo da Vinci’s famous artwork of Mona Lisa that look exactly the same but the original valuable painting is still at the Louvre Museum in Paris.

How does NFT work

An NFT is data stored on a digital ledger, called blockchain. Most of the NFTs are a part of Ethereum blockchain. Ethereum is a cryptocurrency just like Bitcoin and its blockchain supports and stores the units of data of these digital assets. While other cryptocurrencies have their own version of NFTs, Ethereum is currently the market leader. The blockchain certifies the token as a unique asset and any reproduction of that token is considered as an imitation.

Last week, an NFT artwork called the CryptoPunk was sold for around $532 million. The buyer paid 1,24,457 Ethereum for it.

Should you buy an NFT this Dhanteras

The answer is not that simple. You can buy a bunch of NFTs for as low as less than Rs 10 or can even buy one of those tokens for lakhs of rupees.

NFTs are usually treated as artworks so determining the right valuation of them is quite difficult. You can buy an NFT if it suits your taste or you find it appealing. For investments, you should keep a track of how certain tokens are performing in terms of value and how much they’ll be worth in the future.

How to buy NFT in India

Currently, there is no separate legal framework for NFTs in India and you can easily buy one from platforms such as BuyUCoin, Binance, WazirX and many others. You can pay either through the platform’s wallet or you can pay via cryptocurrency.

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