NFT IN CRYPTOCURRENCY!!!

NFT FAQs

To cover any other queries you may have about the topic of NFT art, we’ve answered the most frequently asked questions below. 

What does it mean to mint an NFT?

Minting an NFT is how your digital asset becomes a part of the Ethereum blockchain. Similar to how metal coins are minted before being circulated for public use, NFTs are digital tokens that get "minted" once they are made. When your digital asset is represented as an NFT, it can be bought and sold within the NFT market as a non-fungible token. Its trading history can also be digitally tracked, including when it is sold to another owner or collected again down the track. 

How are NFTs valued?

An NFT’s value can differ greatly depending on the digital asset available. Because NFTs are becoming a popular method for obtaining and selling digital artwork, their value relies on the demand for that artist, as well as the past sales of relevant NFTs.

How are NFTs taxed?

NFTs are primarily taxed at the Internal Revenue Service’s (IRS) collectibles rate. Therefore, digital artwork acquired for less than a year is taxed up to 37%, while those held onto for longer than this period are levied at a minimum rate of 28%. Furthermore, if an NFT is purchased using cryptocurrency, the buyer will be charged capital gains taxes on the profits made on their digital coins.

What is Ethereum?

Ethereum is an open-source blockchain network that enables users to create, publish, monetize, and use business, financial services, and entertainment applications on the platform. It uses its own cryptocurrency, called Ether (ETH), and is second to Bitcoin in market value. 

The Ethereum platform is home to numerous decentralized apps, known as dApps, which cater to a variety of purposes. Due to its distributed nature, the Ethereum blockchain is considered a very secure platform. Furthermore, a vital component of Ethererum is Smart Contracts, a concept that originated within the network. These Smart Contracts are self-executing contracts. They contain the terms of the agreement between a buyer and a seller directly written within the lines of code. It is this unparalleled security that allows ETH to continue to harness value. 

What is a crypto wallet?

Crypto wallets enable users to send, receive, and spend cryptocurrencies such as Ethereum and Bitcoin. They keep your cryptocurrency access passwords (known as private keys) safe yet accessible. A crypto wallet itself doesn't hold money in the way that a normal wallet does, however. Technically, your cryptocurrency holdings exist on the blockchain. Instead, your crypto wallet serves to hold your private keys, which act as proof of ownership and enable you to access your currency. Crypto wallets can come in physical or digital form, such as hardware or mobile apps.

The exciting future of NFTs

NFTs are the new kid on the blockchain, but there’s more to their meteoric rise than meets the eye. While cryptocurrency trends have come and gone, experts predict NFTs are firmly here to stay.

As you’ve learned in this guide, NFTs have taken the simple concept of cryptocurrency and allowed it to evolve. They present a step forward in the reinvention of our traditional financial systems, combining the digital representations of physical assets with the benefits of a tamper-resistant blockchain.

The conversion of a physical asset into a digital one simplifies processes and removes the need for middlemen. As NFTs become more sophisticated and are incorporated within our financial infrastructure, there’s no end to how they will transform the way we create, acquire, and sell goods.