An Introduction to NFTs on Cardano
None of the information presented in this article is intended to be financial advice, nor is it exhaustive. It is merely an introduction to some NFT concepts.
If you are interested in buying NFTs we strongly advocate independent research and the use of disposable funds only.
When buying NFTs you understand and agree that you are solely responsible for determining the nature, potential value, suitability and appropriateness.
What is an NFT / CNFT?
NFT stands for Non-fungible Token. The ‘C’ in CNFT stands for Cardano, referring to an NFT specific to the Cardano blockchain.
Non-fungible means that it is immutable or, in other words, not susceptible to change. An NFT is a unique piece of media with built-in digital authenticity and it is an umbrella term that covers a multitude of digital assets (such as pictures, music and written media), gaming and hopefully much more in the future.
The authenticity of an NFT can usually be verified by its policy ID; a single string of characters or reference which is a unique identifier to a single NFT or NFT collection and which can be verified by its creator.
Beyond appreciation of the asset itself, many NFTs also have utility (something which is on the rise on the Cardano blockchain) or a ‘use’. When it comes to NFT use there is an incredible amount of scope for development, which is one reason why so many people consider buying an NFT. Already implemented are elements of virtual reality (such as the metaverse), gaming, collectibles, domain names, music and movies, and real world NFT use like supply chain, identity, and contracts. It is clearly evident the power of an NFT and its productive use case across a variety of fields.
How much do NFTs cost?
Simply put, the value of an NFT is derived from the speculative value of the asset, at least when speaking on digital content such as art. It is very similar to selling art in the real world. An NFT is relatively cheap to create (or mint) anywhere from .15 to 1.5 ADA including the transaction fee, but can be sold for hundreds or even thousands of ADA. Market demand will hold its value, decrease or increase depending on hype.
In Cardano PFP style projects typically mint somewhere between 30 and 60 ADA.
What is floor price?
Floor price is a term often used in reference to NFTs, particularly across single collections of NFTs. This refers to the minimum price of an NFT within that collection and may fluctuate depending on demand, collectors’ need for funds and the desire for a particular community to retain the NFTs within the collection, amongst other factors.
Because of the ability to set floor price with a single NFT across collections often spanning thousands, we don’t recommend floor price as a good test of value, favouring metrics such as average price over time to be a better indication of the appreciation and depreciation of pieces across large collections.
