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Tech Trends: Understanding NFTs and How they Work

NFTs are the latest craze on the internet, and although social media platforms like Meta and Twitter are creating tools to bring the feature to the mainstream, most of us are yet to understand exactly what they are.

NFT stands for Non-fungible Tokens. They have been around the internet for a while but blew up in 2021 after celebrities like Twitter founder Jack Dorsey, sold his first tweet as an NFT.

NFTs can be described as digital artworks in the form of videos, posts, drawings, or images that can be traded using blockchain technology, just like cryptocurrency. The digital artwork, in this case, comes with a unique address on the blockchain.

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However, unlike ‘fungible’ cryptocurrency, an NFT is ‘non-fungible’ meaning it is unique, one of a kind, and cannot be traded for another. For instance, if you trade a bitcoin for another bitcoin, you will still have the same thing, but an NFT, much like historical artwork, exists as a unique digital piece.

The NFT market has become one of the most lucrative online, with celebrities joining the bandwagon to sell their digital artwork for millions of dollars in the past year alone.

Social media networks are now bringing NFTs to the mainstream with an aim of helping people cash in on posts they consider valuable. Meta recently announced plans to allow users to create and display NFTs on their profiles. The company is also reportedly planning to launch an NFT marketplace to allow users to sell their digital artwork.

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NFTs are primarily supported by the Ethereum blockchain, but unlike cryptocurrency, they are stored with extra information to make them unique. People who buy NFTs get ownership of the digital artwork, a feature that cannot be copied or transferred unless through a sale.

Once you own an NFT, you will have the bragging rights for ownership of the piece of digital art together with the blockchain entry attached to it.  You can use it as your profile picture or post it online on your social media platform. Buying NFTs allows you to support content creators, artists, and contacts who put up their digital content for sale. You can also resell the NFT for a higher price.

For sellers, NFTs come with a feature that allows you to earn a percentage of the profits every time it is sold.

Some people view NFTs as the future of Art collection, and interestingly, almost anything can be sold as an NFT. Prices also vary from millions to a few hundred dollars. Below are just a few pieces that have fetched top dollar.

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A square collage of 5,000 works from digital artist Beeple, start with the oldest in the top left corner and continuing to recent works in the bottom right corner sold for $69 million (Sh7.8 billion)
A user called Rabono purchased this cryptokitty for $170,000 (Sh19.2 million)
Former Twitter CEO Jack Dorsey sold his first tweet as an NFT for $2.9 million dollars (Sh329 million)

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