Understanding Non-Fungible Tokens

  • Digital assets are assets that are created, exchanged, and stored digitally.
  • When it comes to blockchain, cryptocurrency and crypto tokens are digital assets.
  • Digital assets such as cryptocurrency and tokens use advanced cryptography, a method of encrypting data that eliminates the chance of counterfeiting or double-spending of crypto assets.
  • A non-fungible item is a unique digital asset that cannot be interchanged with another item. Bitcoin, for example, is fungible; you can exchange one bitcoin for another and get the same thing.
  • NFTs are non-fungible digital assets.
  • NFTs are not currencies, they are one-of-a-kind digital assets that can be uniquely owned. NFTs are collectible digital assets.
  • Non-fungible tokens can represent assets like art, collectibles, music, videos that are unique as no two NFTs are identical.
The most common use case for NFTs is digital arts.

Some real-world NFT use cases

  • Twitter founder Jack Dorsey sold his first tweet, which launched the popular social media platform, as a $2.9 million NFT.
  • In an article titled "Buy This Column on the Blockchain," the New York Times explained the NFT phenomenon and minted it as an NFT that was acquired for $1,226,309.00.
  • An NFT by Mike Winkelmann that sold for $69.3 million at Christie's was the most expensive ever. The art shows his progression as an artist over time.
  • a 50-second video by Grimes sold for almost $390,000

How to buy NFTs

NFTs are part of the Ethereum blockchain, hence you need Ethereum tokens to buy them and not fiat money. NFTs can the bought on marketplaces like OpenSea, Binance NFT, crypto.com NFT, etc.
The process of purchasing an NFT is like that of eBay, whereby by bidding for an item, you can buy the item and then take ownership.

When you buy an NFT, they are encrypted with a unique code, making them original, even though these items like music, video, games, arts can be duplicated or copied, you own the original license to the particular NFT asset.

How to organize and track and include NFTs in your Estate Plan

One of the biggest mistakes by millennial investors is leaving assets untracked. To protect your digital assets like NFTs and ensure that your loved ones get access to them when you are no longer around, you must add your NFTs to your estate plan.

A personal key or password is required to access NFTs. Any NFTs you own would be forever lost if these passwords were forgotten or misplaced. In the past, people have lost access to their crypto wallet keys, which resulted in millions of dollars worth of digital assets being lost in cyberspace.

When including your NFT in your estate plan, you should ensure that the personal key or unique encrypted code is available to your beneficiary. A digital vault attached to your estate plan is a great place to store this essential information.

By using a digital estate planning tool like Cova, you can add each NFT to a single dashboard as soon as it is acquired so that you can track their value in one place during your lifetime, and designate beneficiaries who will receive a transfer of assets in the case f any eventuality.

It takes only 5 minutes to create a Cova account and start tracking all your assets.
Create a Free Cova Account.

Track your NFTs with Cova