How do NFTs work?
NFTs have some special features:
Each coin printed has a unique identifier.
Other tokens cannot be exchanged for 1: 1 directly. For example 1 ETH is exactly the same as any other ETH. This is not the case with NFTs.
Each coin has an owner and this information can be easily verified.
They live in Ethereum and can be traded in any Ethereum-based NFT market.
In other words, if you have an NFT:
- You can easily prove that the NFT you own belongs to you.
- Nobody can change NFT in any way.
- You can sell your NFTs at the price you determine. The buyer can also offer a price to another person.
- Or, you can easily hold your NFT forever, knowing that it’s secured in your Ethereum wallet.
And when you generate an NFT:
- You can easily prove that you are creative.
- You determine how many copies it has.
- You can earn copyright every time it is sold.
- You can sell it in any NFT market or by mutual agreement by transferring from your wallet.
The creator of the NFT decides how many copies of its assets there will be.
For example, consider a ticket to a sporting event. Just as the organizer of the event can choose how many tickets to sell, the creator of an NFT can decide how many copies it has. You can create multiple tickets to a sporting event, but you cannot sell two tickets for one seat. It is very similar, but each copy is different, the seat is like an assigned ticket. The same sports game but the seat number is different and unique. NFT owner can create only one NFT if he wishes. Thus, it creates a more unique Nft.
In these cases, each NFT will have a unique identifier (such as a barcode on a traditional “ticket”) with only one owner. The intended shortage or abundance of NFT is important and depends on the person creating the NFT.
Some NFTs will automatically pay royalties to their creators when they are sold. This is still an evolving concept but one of the most powerful. Original owners of EulerBeats Originals earn 8% royalty each time the NFT is sold. And some platforms like Foundation and Zora support copyright for their artists.
This is fully automated so NFT creators can sit back and earn royalty while selling their NFTs from person to person.