Non Fungible Tokens – Digital Fine Art

With cryptocurrency booming in popularity, another technology is emerging, namely non fungible tokens. This idea of digital currency and investing in concepts can be immensely confusing for beginners. So, let’s discuss it. What are non fungible tokens? And what do they have to do with digital art?

This article will explore questions like these, along with cryptocurrency and investing concepts. Monzi doesn’t only offer loans for people on Centrelink and bad credit loans. We also love exploring new financial technologies and providing you with a start point for your research. Having said this, let’s look further into non fungible tokens and what they can do for you.

Please note that specific ideas and products presented in this article may not be on offer by Monzi or the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

Fungible vs non fungible tokens

The easiest way to explain non fungible tokens (NFTs) is first to understand fungibility. Essentially a fungible item is any item that you can exchange for a different item of the same description and value. The best way to describe this is to reflect on the Australian five-dollar note. Whether newly printed or crumpled and old, the note will always carry the same value. Additionally, you can add to or divide from the original note without changing its nature. Therefore this makes the note interchangeable. NFTs are precisely the same; interchangeable.

Non fungible tokens are, therefore, one of a kind, and you cannot trade them for the same thing. Cryptocurrency, on the other hand, is fungible. If you trade one coin for another, you’ll still have the same thing that you started with.

What are non fungible tokens?

Now that we have established the meaning of fungibility, what are NFTs? At the current time, the use of NFTs can be considered somewhat ludicrous. So, before getting into exactly how jovial NFTs can be, let’s start with the technical terms. If you break it down an NFT is a unique token on a blockchain. What’s a blockchain? We’ll get to that later in the article. Let’s move on to the fun stuff. NFTs are essentially digital art. They are a concept that many people hope will develop the future of fine art collecting.

This means that purchasing an NFT is essentially putting lots of money into a square of digital art or a small video put out by an artist. The funny thing is, anyone could simply download a copy of this art for free. So, what’s the point in buying? Well, buying NFTs give you some unique bonuses, such as ownership of the work. Whilst the artist will still retain copyright and reproduction rights, you will be the only person that owns the original. While that doesn’t sound like much, it’s essentially the same as owning Vincent Van Gogh’s original Starry Night painting. You can find copies of this piece globally, but owning the original artwork is still intensely impressive.

What are non fungible tokens used for?

The use of a non fungible token generally depends on whether you intend to be an artist or a buyer. If you consider yourself an artist, NFTs may provide you with alternative ways to sell your artwork. Particularly if you are struggling to find a local market and want access to a larger buyer pool. You also get the initial sale value; however, there is technology in place that can enable you to earn a percentage every time your NFT sells on. That way, if your work soars in popularity, you’ll still get to reap the rewards.

On the other hand, if you are a buyer, NFTs allow you to support an artist you admire. And you’ll get certain usage rights with your purchase, such as the ability to post the image where you like or to use it as a profile picture. If you consider yourself to be a collector, there is the possibility that you could buy an NFT and see the price rise in future, thereby enabling you to sell it for a profit. However, this may be a gamble, as art sales are in real life. Realistically, you will find some people who treat NFTs as prestigious fine art and others who use them like trading cards. It’s up to you how you would like to use them.

How to create a non fungible token?

You don’t necessarily need extensive cryptocurrency knowledge to be able to mint your own NFT. You will likely need some digital art ability, however. Although, some of the NFTs available are still successful without much artistic talent involved. Before you do anything, you will need to choose a blockchain you will issue your NFTs on. Read below for information on blockchains. Currently, Ethereum is the leading blockchain service for non fungible tokens. And, whilst this may be a familiar name, there are several other blockchains you can opt with instead. There are multiple factors to consider when choosing blockchain technology for your NFTs. However, Monzi won’t get into this.

Once you pick a blockchain and create a wallet within, you can connect your wallet to the marketplace and begin creating your collections. This is, of course, just a base idea of how the process works, and you should look to do your research first. Keep in mind that there may be additional fees to upload your creations.

What is a blockchain?

NFT transactions record on an encrypted public ledger, as with any cryptocurrency coins you engage with. This ledger is commonly known as a blockchain. Blockchains are controlled by computer algorithms that ensure the information it stores is impossible to change and extremely difficult to hack. These blockchains duplicate and distribute transaction information across their entire network and safeguard you from the possibility that someone else tries to cheat the system.

Blockchain technology is the secret to cryptocurrency success and makes sure that any money you pass on or earn is safe from cyber threats. While this doesn’t mean it’s impossible to get hacked, it does mean you will have more peace of mind.

How are NFTs related to cryptocurrency investing?

It’s easy to hear all these acronyms and think that NFTs might be related to cryptocurrency. This is a misconception. The similarities between the two are that they both store their data on blockchain digital records. NFTs have their unique value and cannot exchange for another NFT of equal value. On the other hand, Cryptocurrency has more evident and transparent value and can exchange with coins of equivalent value. An excellent way to remember the concept that applies to NFTs is to keep in mind that you can only exchange a Monet for another work of more or less value. It would be near pointless to trade it and make no extra profit.

Cryptocurrency investing does not have any digital artwork attached. And whilst art can be an investment, crypto is its own entity and remains in its own league.

How to buy non fungible tokens?

Before you jump straight into buying any NFTs, there are four things to workout:

  • Which NFT marketplaces you intend to buy from
  • What you will you be paying with
  • Which wallet you need to download
  • What price the NFT you want is being sold at

The majority of NFT marketplaces list the price value in decimals of Ether or another cryptocurrency. However, due to the volatility of the market, the dollar value often accompanies the decimal value. Depending on the market you choose, this may vary slightly. However, you can keep up with the order of operations through more thorough research. Typically, if you are engaging or planning to engage with NFTs, you will also experience cryptocurrency and how the two intersect.

What is NFT art?

NFT art is potentially some of the most random art you can find on the market. However, it is possible to find some truly stunning art pieces on various marketplaces that may have real value. In other cases, you will likely encounter many non fungible tokens that have been designed as a joke, regardless of whether they are performing well. Whilst these digital collectables seem jovial and unlikely to succeed, it is a real possibility that these digital assets may become the way of the future.

Not only do NFTs play into the popularity of cryptocurrency, but they also represent the possible revolution that could be coming for the art industry. Seeing these two phenomena interact is beneficial to both cryptocurrency and non fungible tokens.

List of non fungible tokens

Wouldn’t it be great if we could list all the non fungible tokens available? Unfortunately, this just isn’t what Monzi does best. Not to mention that non fungible tokens are growing in popularity every day, which means that the number of tokens available is constantly increasing. However, if you are interested in the idea of rankings and lists, you can find various websites that list them in order of most expensive or by popularity.

What Monzi does do best is matching those looking for personal loans to a lender who may help. If you are looking for some extra cash, no matter the motive, you can apply for a loan with Monzi. We’ve made our process as simple as possible to benefit you when you need fast cash loans. The lenders in our network are private lenders who may be more willing to work with your application than a financial institution lender might be. It’s hard to get a second chance, but if you have a poor credit report, a Monzi lender may offer a helping hand in the form of bad credit loans or no credit check loans.

What is an NFT marketplace?

A marketplace for non fungible tokens is much like what you’d expect from a real-life marketplace. Marketplaces are sites that allow collectors to create their collectible digital assets or buy and sell with others. Essentially if you want anything to do with the up and coming NFT industry, a marketplace will be the hub where you sell your own, or buy into other people’s art.

There is no central NFT marketplace; instead, you will have to research the existing marketplaces to identify which one will offer you the best returns. Alternatively, if you are uploading your non fungible tokens, you may be interested in whether or not you are likely to receive a better deal with one marketplace over another.

non fungible tokens

How to sell NFTs?

There are two main ways to sell your non fungible tokens. These are trading one you have already bought, or by selling the one you have created (sometimes known as minting). The attached fees accompany both options. These fees are:

  • Gas fees: Money that goes towards crypto ‘miners’ who aid the blockchain computing power.
  • Final sale fees: The marketplace dictates these fees before you complete a transaction.

You can expect to resell on a secondary market if you are selling an NFT that you bought off someone else. This is how real art sales work and, generally, the sales of all second-hand items. It is possible here that you can sell your tokens for more than you originally paid for them. However, the long and short term values of NFTs cannot be guaranteed – something worth keeping in mind.

If you are selling a non fungible token that you mint yourself, you will do so by pushing it forward to be sold once the upload process is complete. Most times, you should have the option to set a ‘buy now’ price or a reserve price for any auction you may like to have. This will depend on your chosen marketplace. Some marketplaces may also allow you to receive future royalties from the sales of your work.

Why would you want cryptocurrency?

On the other side of the blockchain is cryptocurrency. Cryptocurrency has blown up in popularity and casts a shadow over NFTs. However, there is still a lot of speculation when it comes to crypto. There is real potential for digital currencies to become mainstream. However, there are few regulations around the currency and not enough evidence to predict its potential. Not to mention that some of the giants in the business world refuse to interact with crypto.

However, a key motivation for cryptocurrency investing is the idea that it will be long-term and reliable. Currently, crypto has a limited supply, and it is impossible to be diluted by political bodies. It is also proving difficult to tax or confiscate, as you currently need owner permission before you can do so.

At present, crypto is a new technology that people are looking to explore and a trend worth jumping on. Everyone thinks cryptocurrency will give them a shot at becoming instant millionaires. For this reason, you must understand how cryptocurrency works to make educated decisions as you progress.

How does cryptocurrency work?

Cryptocurrency encrypts on similar blockchains to that of non fungible tokens. It also allows you to remove the middle man, an investment broker or bank, from your investing. Just as you might buy an NFT on a marketplace, you can purchase crypto off of an exchange. There are several currencies available to you across multiple exchanges. However, you have likely heard that there are some more prominent coins than others. Bitcoin and Ethereum are the two that often come to mind when considering the topic. Other coins that you can find for sale are often known as altcoins.

This allows investors the opportunity to go with the mainstream coins that are likely to remain steady. If you chase other coins on the market, you can complete the research and place a gamble on the success of such a coin. Ensure that you inform yourself before embarking on such a challenge. An excellent page to help you start your research is the MoneySmart cryptocurrencies and ICOs page.

Other ways to make your money work for you

Aside from non fungible tokens and cryptocurrency, several other potential investments are available for you to explore beyond the digital world. The goal of these investments is to make your money work for you. Essentially this means putting your money into an investment that you can sell later and make a profit off, or that will generate you interest over time.

The most common ways to do this are through investment properties or the stock market. However, you can also invest in other things such as gold and silver, bank products, bonds and exchange traded funds, or even your retirement in some capacity. The easiest and most risk-free way to do so is to invest your money in a high-interest bank account. You can research within your bank to ensure that you are getting the best deal. This way, you can rest easy knowing that your cash will generate its own interest and that it will remain safe within the bank. Alternatively, you can look into term deposits. If you identify strong term deposit rates, you can lock your money away for a select period and fix the interest. This way, you will know exactly how much you can expect to get back at the end of the period.

Borrowing to invest

Taking a loan and putting it towards any kind of investment has its pros and cons. In some instances, such as with a mortgage loan, borrowing to invest may be your only option. The being as the size of your purchase is quite significant. Therefore, you will need help. Doing so here is appropriate, and you may even be able to skip the lenders mortgage insurance by using the equity of the house you live in.

In some instances, you may also have the option of taking a margin loan to boost the amount you can invest in shares and other investments on the stock exchange. You should be cautious about this, as there is increased potential for things to go wrong. Should you receive a margin call from your broker and need to deposit more money to avoid making a loss, you will have two debts that need repaying.

However, if you are confident in what you are looking to invest in, why not consider using a personal loan for this purpose? Personal loans with Monzi can potentially give you quick outcomes on small loans. This way, if you’re looking to bolster your purchase, Monzi might be able to get you the cash that you need in hand. This can potentially come in the form of same day loans.

Pros and cons of borrowing to invest

Advantages and disadvantages accompany every decision in life. If you are looking to borrow to invest, you should be cautious. The pros come in the form of potential reward increases in some cases. The more money you have to invest, the larger your potential reward. Property investing works similarly. The more money you can access through the lending process, the larger (or more) property you may be able to purchase.

Disadvantages mostly accompany investment losses. Margin loans are particularly notorious for negative outcomes. This is as they can potentially land you in a self-dug hole. However, property is the same. If you make a loss on a home you renovate to sell, you will still have a home loan that requires repaying. Therefore you must ensure you are wise about investing before you dive headlong into it.

Tax treatment of non fungible tokens

In Australia, tax treatment for NFTs is very similar to that of cryptocurrency. Essentially, how much you are taxed will depend upon your reasoning for holding or transacting with the digital asset. Some of the ways you might pay tax on these tokens could include:

  • As a profit-making scheme or business
  • On your revenue account
  • Under the Capital Gains Tax (CGT)

However, depending on the terms of your NFTs contract, you could be taxed on any combination of the above. If you are the creator of a digital file, you can potentially be taxed on the sale of the digital file. But you can also get taxed on any further commission it may make you. For sellers, the tax will only apply to the one-time profit that you make.

How regulated are NFTs and crypto?

Whilst both of these digital technologies have regulations in some capacity; they cannot be government regulated. As mentioned, they can be taxed to a certain extent. However, the marketplace is mostly beyond government control. So you don’t necessarily have to worry about your safety. However, it will be interesting to see how the crypto market and the world of NFTs evolves into the future. Ideally, for creators, it would be good to see non fungible tokens flourish. Flourish in a way that can be self-regulated and doesn’t harm the planet as much as it currently does.

Can Monzi help with NFTs?

Monzi is not a blockchain and cannot sell nor buy NFTs. However, you are welcome to put a personal loan towards the purchase of non fungible tokens. If you have any expenses you need help with, why not consider a personal loan? If you have already done the thinking and are ready to apply for a loan, you can start with Monzi. Simply click ‘apply now’ or scroll up to our loan slider to begin.

From there, our application process is simple. We’re 100% online and paperwork free, meaning to get started, you’ll just need an internet connection. Once you apply, we match you to a lender in our network in as little as 60 minutes, providing you apply during business hours. From there, if we’re successful, your lender will contact you soon after.

But don’t apply if you still have questions. You can direct any queries about our service to hello@monzi.com.au. Our friendly team will do their best to answer any questions you have and help you start your application.

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Liked what you read here? Maybe you’ll also like what we post on our social media. You can find Monzi on Facebook, Instagram, Twitter and Pinterest. We post our latest updates and newest articles to our socials daily, meaning you’ll always be in the loop. And, if you don’t fancy sending emails, you can direct your questions to our direct message boxes.

We looking forward to being friends in the future, see you there!

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