What are NFTs (Non-Fungible-Tokens)?

On March 11, 2021, an international artist called Beeple sold a digital image called 5,000 Days. Even today, it remains the highest price paid for any digital artwork globally. The challenge for any digital artist is that you can right-click and save this image or almost any other image to your own computer right now. The above image was a little different, and the reason why it sold for USD $69.3m.

While you may be able to enjoy the artwork on your computer, the difference is that you do not own it. The image was sold as a one-off Non-Fungible Token (NFT), using the same technology that created a massive bull run in cryptocurrencies from 2020 - 2022 and changed how we think about ownership in the digital age.

From crypto art and in-game items to music rights and digital real estate, NFTs turn one-of-a-kind digital assets into tradable tokens on the blockchain, giving creators more control and giving collectors collectibles that are truly unique and prove beyond doubt digital ownership.

In this guide, we’ll unpack questions like “what is an NFT?” and “what does NFT mean?”, what NFTs are used for and most importantly, how you can start exploring the NFT universe, with a little help from BTC Markets.

Understanding NFTs and how they work

So, the big important question: what is an NFT? Before we dive deeper into what an NFT is, we need to understand the concept of fungibility. The Aussie dollar is fungible, you can automatically exchange two 5-dollar notes for a 10-dollar note. The unit of currency is the same. The same can be said for Bitcoin and Ethereum. With NFTs, on the other hand, they are Non-Fungible Tokens. Each NFT represents ownership of a specific item that is not readily interchangeable, e.g., an NFT can represent a piece of digital art, a video clip, or even a tweet.

When you own an NFT, you hold a verifiable certificate of ownership that is recorded and secured on a blockchain and is available for anyone with an internet connection to view. When they are stored on a public blockchain, like Ethereum, it gives a transparent view of the piece’s authenticity and ownership history.

At BTC Markets, we’re committed to helping you understand more about the cryptocurrency space and provide educational resources through our Learning Hub and Blog to help you explore innovations like NFTs confidently.

What makes NFTs different from cryptocurrencies?

While NFTs and cryptocurrencies both use blockchain technology, they serve different purposes:

• Fungibility: Bitcoin and Ethereum are fungible. NFTs are non-fungible, meaning each one is unique and is hard to make directly interchangeable.
• Purpose: Cryptocurrencies are typically used as a medium of exchange or a store of value. NFTs, on the other hand, represent ownership of a unique asset, whether digital or physical.

This distinction is critical in understanding how NFTs unlock new ways to prove authenticity, ownership, and provenance in the digital world.

The value of NFTs: why are they so popular?

NFTs have captured global attention because they do something revolutionary. For the first time, we can give digital content absolute ownership and real value. No longer is it just right-clicking and saving; now, through blockchain technology, we can establish direct ownership. Whether you're an artist, gamer, musician, or just a curious investor, NFTs open doors to new ways of creating, collecting, and connecting. Here’s how:

Digital art and collectibles

For artists, NFTs are breaking down the walls of the traditional gallery model. An illustrator in Melbourne can now create a digital artpiece, create an NFT to digitally represent that artpiece, and sell it to collectors digitally in Tokyo, Berlin, or New York, with no middlemen required. Even better, through the use of smart contracts, artists can also earn royalties every time their work is subsequently resold. This helps to create a more sustainable income stream for artists. Beyond traditional art, we’ve seen everything from profile picture (PFP) collections like CryptoPunks to tokenised footy trading cards or even the Australian Open tennis tournament goes viral in NFT markets.

Gaming and the metaverse

In the gaming world, NFTs give players the opportunity to have digital ownership of their in-game assets, from custom skins and rare weapons to plots of virtual land. Unlike traditional games where your purchases stay locked in one gaming ecosystem, NFT-based items can be bought, sold, or even transferred across games or platforms. Some Australian developers are already experimenting with Web3 gaming, paving the way for local players to profit from their skills and acquire digital inventory.

Music and entertainment

Musicians are using NFTs to bypass streaming platforms and offer direct-to-fan experiences. Picture an indie artist launching a limited-edition album NFT that comes with backstage passes or exclusive unreleased tracks. Even Aussie bands are tapping into this, using NFTs to reward loyal fans or fund new releases, without relying on big-label contracts. It’s a new kind of music economy, one where fans are more than listeners; they’re stakeholders.

Identity, access, and community

NFTs are increasingly being used as digital membership cards. Holding a specific NFT might give you access to private Discord groups, exclusive product drops, or real-world events. Think of it as a VIP pass that lives in your wallet; it’s proof that you belong to a community or movement. Some NFT projects even offer governance rights, letting holders vote on decisions like product direction or community funds.

Once NFTs have been created through a process called minting—they can be bought and sold in marketplaces that are mostly built on the Ethereum blockchain that underpins most of the NFT ecosystem. You can explore Ethereum further on BTC Markets to help you start your NFT journey.

Popular NFT marketplaces to explore

Ready to explore the world of NFTs? Just like art galleries or online stores, NFT marketplaces are where creators and collectors come together, and each platform has its own vibe, community, and specialities. Here are some of the most popular places to start your journey:

OpenSea

Often described as the “eBay of NFTs,” OpenSea is the largest and most established NFT marketplace. After first launching in 2017, it soon commanded 90% of the NFT market. It hosts everything from generative art and gaming items to music, photography, and sports collectibles. If you’re just starting out, OpenSea is a great place to browse, bid, and get a feel for what’s trending. It supports multiple blockchains, with Ethereum being the most popular, making it a go-to hub for collectors worldwide.

Blur

Designed with more advanced traders in mind, Blur is fast becoming the go-to alternative to OpenSea, especially for users who want speed, analytics, and bulk trading tools. Blur has advanced features like real-time data feeds, portfolio management dashboards, and the ability to sweep entire NFT collections in one transaction.

Foundation

For those who prefer higher-quality digital art, Foundation is the place for you. Think of it as a curated digital gallery where established artists and promising newcomers alike release limited-edition works. It’s invitation-only for creators, which keeps the quality high and the launch events exciting, when artists drop their latest work. If you’re looking to support digital artists and own a piece of original work, Foundation offers a more boutique experience.

A note for Australian users: Most NFT marketplaces run on Ethereum or similar blockchain networks. You’ll need Ethereum (ETH) in your crypto wallet to place bids or make purchases, and that’s where BTC Markets can help. As a trusted Australian exchange, BTC Markets makes it easy to buy ETH and start your NFT journey with confidence.

Risks and challenges of NFTs

NFTs open up exciting new possibilities, but it's important to be aware of potential risks:

• Price Volatility: NFT prices can swing dramatically, and the value of an NFT can change very quickly just based on market trends or sentiment.
• Limited Liquidity: The number of NFTs available in a collection is generally limited, meaning if you need to sell quickly, you may have to sell at a much lower price than you would like to see. For further insights into the importance of crypto liquidity, please see our article: What is Crypto Market Liquidity?
• Speculative Nature: Many NFTs are bought with the hope of future appreciation, but not all retain or grow in value.
• Legal and Copyright Issues: Questions around intellectual property rights and ownership can complicate NFT transactions.

At BTC Markets, we believe that informed investing is smart investing. Visit our Learning Hub and Blog to access valuable resources on risk management and staying up-to-date with crypto and blockchain innovations.

How to buy NFTs in Australia

Getting started with NFTs involves a few simple steps:

• Set up a Crypto Wallet: You'll need a wallet that supports Ethereum and NFTs, such as MetaMask.
• Buy Ethereum: Purchase Ethereum through a trusted platform like BTC Markets.
• Connect to an NFT Marketplace: Link your wallet to platforms like OpenSea or Foundation.
• Browse and Buy: Find an NFT you like and make your purchase. The NFT will be stored securely in your wallet.

BTC Markets makes the first steps easy, offering a secure and trusted place to buy the Ethereum you need to get started.

Explore the world of NFTs with BTC Markets

NFTs are redefining ownership, opening up new opportunities for artists, collectors, gamers, and investors alike. Whether you're simply curious or ready to dive in, BTC Markets is here to help you navigate the sometimes-challenging world of cryptocurrency and blockchain innovation.

Start your journey today with BTC Markets, Australia's trusted crypto exchange.