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What Are NFTs? Why Do Investors Buy Non-Fungible Tokens In Record Numbers?

· By Zipmex · 9 min read

What are NFTs (Non-fungible Tokens)?
What is a Fungible Token?
What are NFTs’ Uniqueness?
How Does an NFT Work?
The Benefits of NFTs
The Limitation of NFTs
The Development of NFT: 1.0, 2.0 & 3.0
How to buy NFTs
How to sell NFTs
How to make NFTs
NFT Use Cases In Businesses
Factors Affecting NFTs’ Prices
How to invest in NFTs
NFT and Business Opportunity

It’s impossible to ignore the excitement around NFTs these days. It has had a profound impact on a wide range of industries, but none more so than gamingthe arts, sports, fashion, and music

This article is a nice place to start as an overview for those who want to invest in NFTs but aren’t sure exactly what they are.

What are NFTs (Non-fungible Tokens)?

NFT stands for ‘Non-fungible Token.’ Non-fungible means something is unique and one-of-a-kind; something that is non-fungible is made up of individual units that are not interchangeable. 

So, unlike cryptocurrencies, which have a hard supply of millions of units, NFTs only have a single unit. While they cannot be reproduced or interchanged like exchanging currencies, they may be traded like any other artistic work.

Blockchain technology is used to validate the uniqueness of NFTs, which means that a counterfeit one will be noticed right away. 

For example, when friends borrow a car, they can’t return with another car to replace each other even if they have the same model, make, and type of car. NFT works the same.

To explain how NFTs work, assuming we have a single picture, we can mint it into NFTs and later sell it on the NFT marketplace

Anyone who finds your NFT on the market attractive could purchase it using cryptocurrency. At this point, the picture mentioned above will belong to the buyer, with certified ownership, and will be stored in buyers’ digital wallets.

What is a Fungible Token?

For the sake of clarity, let’s take a look at the fungible token. A fungible token is a digital asset that can be interchangeable and replaceable. 

For example, a friend borrowed a 100 USD banknote, which is an old banknote. When returning it, a friend can return a new 100 USD note, which both banknotes still have the same value. 

This differs from NFTs, which can’t be replaced with another asset, like borrowing a car in the illustration above.

What are NFTs’ Uniqueness?

Most of the well-known NFT Projects were created on the Ethereum blockchain using ERC-721 and ERC-1155 tokens. Various types of digital files can now be minted as NFTs, including images, artworks, collectibles, internet memes, trading cards, in-game items, and others; this is why numerous industries have now leaped into the NFT realm to seek new opportunities.

In addition, Cointelegraph explains  the uniqueness of NFTs, which have three aspects:

  • Unique – The metadata on each NFT is recorded as the certificate of authenticity, 

helping the NFT uniquely differentiates itself from all the rest.  

  • Rare – Despite an infinite supply of specific NFT collections, developers always already limit the number of NFT pieces, making them rarer and scarcer in the market. 
  • Indivisible – NFTs can’t be split into smaller units for sales. They can only be traded on the whole piece. 

How Does an NFT Work?

While the current buzz around NFTs is mostly related to their incorporation into the blockchain gaming industry, you would be surprised to learn about how NFTs can be utilized.  

A non-Fungible Token or NFT is a cryptographic token leveraging blockchain technology to allow ownership of any asset. Each NFT is unique, just like collectibles and art. 

Think about it like this; if you had to buy a Picasso painting, you wouldn’t buy a replica of the painting. The replica will never be the same as the original painting, and it wouldn’t hold the same value in the market. You can’t just sell any replica claiming to be the original painting, either.

Similarly, each NFT is unique from the other. If you buy or create an NFT, say an NFT art, it cannot be duplicated. On acquiring the NFTs, the records of transfer of ownership become immutable and unchangeable. You solely are the asset owner unless you plan to part with it by transferring it to another person. 

The Benefits of NFTs

Being a digital version of rare assets, NFTs opened doors for both collectors and artists to make a living by selling and buying or even trading for profits like a crypto investment.

Other perks of NFTs as digital assets include fewer maintenance costs and greater asset security. This allows investors and collectors to trade NFTs with lower accruing fees or perhaps entirely revolutionize the way we amass rare collections in the future.

In particular, the benefits of NFT can be briefly discussed as follows:

  • Proof of Ownership: The ownership of NFTs is secured by blockchain, where the asset is tied to one ledger only. Indeed, NFTs are indivisible, which heavily strengthens the notion that each of them belongs to one owner only.
  • Proof of Originality: Apart from ownership, blockchain also records the metadata about NFTs’ authenticity. This is the main reason why NFTs can’t be duplicated, replicated, and replaced with another one.
  • Transferability: This NFTs’ benefit is apparent mostly in the gaming industry. In the past, if we decided to quit playing a game permanently, the in-game items we bought were left there for nothing. In NFT games, we can own in-game items in the form of NFTs, which can be further traded in the marketplace for profits, or stored in the digital wallet once we quit the game. 

The Limitation of NFTs

At the same time, there are some limitations of NFTs that we need to consider: 

  • Can’t replace physical art: Physical art can’t be digitized. The experiences of owning one-of-a-kind art drawn on paper or canvas can’t be replaced by NFTs, which are digital files.
  • Value Uncertainty: While it is true that if we purchase one CryptoPunk picture, we will only be entitled to possession. If someone comes to copy that photo and set it as a social media profile, they can still do it anyway. Despite the authenticity and irreplaceability, the value of NFTs is still in question.
  • High Expense: In addition to NFTs’ price tag, investors are further charged the transaction fee in the marketplace. Some markets may charge as much as 10 USD or more for each transaction.

The Development of NFT: 1.0, 2.0 & 3.0

NFTs are yet another innovation that has always been advanced. NFT has developed from NFT 1.0, 2.0 to NFT 3.0, embracing its possibility to the greatest extent possible and enhancing user experiences.

NFT 1.0 started as a simple concept: converting artwork into an NFT that can be stored on the blockchain. NFT 2.0, later on, introduced cross-platform transferability and upgradability, allowing people to mint and take ownership of the underlying asset. 

NFT 3.0, released recently, has been designed to help businesses integrate more effectively than in the past. The recent NFT integration is by Twitter. When it featured NFT Profile Picture 一 it allows users to use NFTs as the display images. Despite its minor alterations, this feature offers a way for the NFT industry to continue its upward trajectory.

How to buy NFTs

  1. Set up an account on an exchange. You will need an account on a crypto exchange to buy cryptocurrencies such as Ethereum in order to fund your NFT purchase if you don’t already own cryptocurrencies
  2. Buy cryptocurrency – You will have to purchase the cryptocurrency that is the acceptable payment medium for purchasing the NFTs.
  3. Set up a digital wallet – The digital wallet is where the NFTs you purchase will be held. If you don’t have a digital wallet, go ahead and set one up.   
  4. Select an NFT marketplace – Choose an NFT marketplace and sign in. Here is where you’ll be able to pick and choose the NFT you wish to buy. You want to choose a marketplace where more people transact for better liquidity. 
  5. Purchase the NFT – Finally, buy the NFT using cryptocurrency. You will have to pay a gas fee which can be extremely expensive, or bid in an auction depending on the seller’s conditions.

Check out “How to buy, sell, and create NFTs step-by-step instructions” for more details. We have listed everything you need to know about how to purchase NFTs there.

How to sell NFTs

Whether you made an NFT or purchased one, you would have done it on an NFT marketplace. You can sell an NFT in just a few steps, assuming you already have one. 

  1. List your NFT for sale – You can list your NFT for sale in the marketplace where you minted it or another marketplace. While listing it in another marketplace would cost you more, it is better to have a product listed in many marketplaces as you can tap into more potential buyers. 
  2. Promote and manage your listing – Although your NFT will be available for sale, it is advisable to market your listing on social media for better traction. You can resort to a press release, get famous influencers to promote your NFTs, and also have your current marketplace market your NFTs for you. 

How to make NFTs

Here is a step-by-step guide to making an NFT:

  1. Choose the asset – Determine what asset you want to convert to NFTs. It could be anything digital like art, music, video, meme, literally anything.
  2. Select a Blockchain – To mint the asset to NFTs, you need to select a Blockchain technology you’d like to use for your NFTs.
  3. Set up a digital wallet – Set up a digital wallet as you’d require cryptocurrency for funding your investment.
  4. Select a marketplace- NFT marketplace is the stock exchange equivalent for buying, selling, and trading NFTs. You will have to choose a marketplace for your NFTs, just like how a company would choose which stock exchange they want their shares to be listed on. 
  5. Upload your file – The NFT marketplace you have chosen will have instructions on uploading your digital art to the platform to convert it into a marketable NFT. 
  6. Determine selling strategy – You can sell it at a fixed price or resort to an auction. The auction can have a time limit, or you can keep the time limit open-ended and decide when you want to close it.

NFT Use Cases In Businesses

NFT Game

NFT’s gaming sector is a pioneer owing to its fast-growing market and rapidly evolving in-field technologies. These include Axie InfinityThe Sandbox, and Illuvium, all of popular NFT games that everyone knows.

NFT Game emphasizes the idea of ‘Play-to-Earn’ gaming to encourage players to make money while they play. Players could mint, collect, and farm in-game NFT collectibles for a profit with incentive elements in each NFT game.


NFT Fashion

In 2021, the rise of NFTs in the fashion sector will be a significant milestone. We can all see this from world-renowned brands like Louis Vuitton, which produced Louis the Game as the NFT game for its 200th birthday, and Gucci, which created an NFT short film that can be sold for more than 25,000 USD.


NFT Sport

It’s like a tidal surge of the sports industry and NFT news. As of this writing, NBA Top Shot is the most well-known NFT in the sports world; it’s a blockchain-based marketplace where NBA highlights are sold as NFTs. “Dunk LeBron James” is one of the most talked-about NFTs in NBA Top Shot right now.


NFT Art

NFT Art is a digital artwork issued in the form of NFT. Apart from NFT pictures, It can be found in numerous forms: photography, video, internet memes, and many more.

At the present, the most expensive NFT art in the world is Everydays-The first 5000 Day by Beeple. The NFT was sold for around 67 million USD at Christie’s auction house. More pricey NFT collections exist, such as Cryptopunk, 10,000 NFT pixel avatars, and Bored Ape Yacht Club (BAYC), which features monkeys with bored looks.

Factors Affecting NFTs’ Prices

The price of NFTs has skyrocketed in recent years, reaching billions of dollars in certain scenarios. The price of NFTs is affected by a slew of different variables. When celebrities talk about or post about their own NFTs on social media, the price of NFTs invariably goes up.

Another element affecting NFT price surges is the NFT’s background. As an example, the ‘first 5000 days’ is a compilation of 5,000 Beeple’s efforts over the span of 13 years, making it the most expensive NFT in the world.

Finally, the rarity of NFT limited editions likewise raises NFT values. The best examples are CryptoPunk, which has 10,000 unique pieces, and MetaWarden NFT, which has only 3,000.

How to invest in NFTs

Not just creators and collectors, Investors could also gain so much from NFTs. To invest in NFTs, investors need to complete their research on the prospective opportunity in their chosen NFTs. 

Additionally, they must examine the volume of trading, the NFT ecosystem’s efficiency, and the sustainability of projects. NFT Scam is a bad example of NFT that should be avoided.

NFT and Business Opportunity

Increasingly, brands embrace the NFT world, underlining the new business possibility that can grow into other enterprises of all kinds. We might see a new marketing effort, such as a special deal or VIP memberships that are exclusive for NFT owners in the future. 

NFT has made greater use of Blockchain’s full potential than ever before. It has the potential to disrupt the collectibles, art, design, sports, and fashion sectors by creating digital assets that can be exchanged and new investment possibilities.

Updated on Sep 21, 2025