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What is
an NFT?

The world is ablaze with chatter of cryptocurrencies and NFTs but what does it all mean? NFTs are non-fungible tokens (or digital contracts) that run off the Ethereum Blockchain.

Blockchain technology is used for authentication of appreciable assets. Because it provides a failsafe digital record, it also allows digital artists to register/trademark their artwork for the first time; and retain royalty rights when it is sold or transferred. This capability has turned the collecting world upside down by essentially creating an entirely new market for art.

Why Jewelry and Art is the Perfect Marriage

Although this new landscape can be confusing and scary to navigate, Metagolden offers a way in via a new asset class combining digital NFT art purchased together with the safest, most appreciable commodity known to investors: gold. By partnering with artists in the digital space, the twin assets appreciate independently from each other creating value for the holder today, tomorrow, and forevermore. Your physical piece represents your digital investment that appreciates while you wear it! And Metagolden manages the entire process for you.

 

What exactly is an NFT?

 

An NFT, or ‘non-fungible token,’ is a unique, digital certificate stored on a blockchain and provides certain ownership rights in an asset, typically a digital one, such as a digital work of art. NFTs provide a powerful tool to establish and demonstrate ownership rights in the digital asset space. It is often hard to demonstrate such rights given how quickly and easily digital works can be replicated. NFTs are described as ‘non-fungible’ because each one is unique and of different value. This contrasts with ‘fungible’ assets such as dollars or Bitcoin, which are identical and interchangeable.

An NFT is generated (or ‘minted’) using a ‘smart contract’, which is computer code stored on a blockchain. The NFT includes a few different fields such as the NFT’s unique identifier (typically referred to as a ‘TokenID’); the blockchain wallet address of the current owner; and an identifier of where the digital work of art associated with the NFT may be found. Since blockchain transactions are fully transparent, anyone can view an NFT and its underlying information, including the blockchain address of the current owner and the blockchain address of each owner since the creation, or ‘minting’ of the NFT.

When a buyer purchases an NFT, they must have a digital wallet to receive, access, and transfer an NFT. An NFT can be bought and sold like other pieces of property. These purchases and sales are effectuated by transferring the NFT through a blockchain transaction from the seller to the purchaser. Download the app Metamask if you want to set up your digital wallet. Make Sure you put your password and seed phrase in a very safe place and do not share your seed phrase with anyone. If you forget your password, your seed phrase is the only way to get into your account. 

What are some of the benefits of an NFT? 

Scarcity: Since NFTs are non-fungible and stored on a blockchain, the owner of an NFT associated with an asset, typically a digital one, such as a digital work of art, knows that they alone hold that specific NFT.  

In some cases, an artist or rights holder may elect to have a smart contract generate a limited number of NFTs for the same work, similar to how an artist might release a limited edition of physical work. A buyer of an NFT, looking at the NFT code, would see the number of NFTs that could be generated as part of a limited edition.  

Authenticity: Once an NFT is minted on the blockchain, it is a unique token that anyone can view and access to confirm the metadata, ownership history, TokenID, blockchain address, and other underlying information. In addition, since transactions on a blockchain are publicly viewable, buyers can see the address from which the NFT was first minted.

History of ownership: As noted, every transfer or purchase of an NFT is recorded on a blockchain, along with the blockchain address of every digital wallet that has held that NFT. As a result, there is a publicly accessible record documenting the ownership history for each NFT that cannot be altered or erased. Provenance is therefore automated, accurate, and verifiable. 

What Is a Blockchain?

A blockchain is a distributed database shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.

Is Blockchain Secure?

Blockchain technology achieves decentralized security and trust in several ways. To begin with, new blocks are always stored linearly and chronologically. They are always added to the “end” of the blockchain. After a block has been added to the end of the blockchain, it is extremely difficult to go back and alter the contents of the block unless a majority of the network has reached a consensus to do so. That’s because each block contains its own hash, along with the hash of the block before it, as well as the previously mentioned time stamp. Hash codes are created by a mathematical function that turns digital information into a string of numbers and letters. If that information is edited in any way, then the hash code changes as well.

How Are NFTs Different From Cryptocurrency?

NFTs are not the same as cryptocurrency. An NFT uses cryptocurrency to conduct the transaction. It uses the same blockchain technology that cryptocurrency uses, but the asset is set up differently. Whereas a cryptocurrency coin can be traded or exchanged equivalently, the NFT cannot. Each cryptographic asset is set up with a unique identification code and metadata that distinguishes one NFT from another. In other words, you can trade one Bitcoin for another Bitcoin—they are equal—but NFTs don’t trade equally.