NFT (Non-fungible Tokens) : Unique Digital Assets

“32-year-old Delhi-based digital art creator Amrit Pal Singh, minted or created his first NFT or non-fungible token this February, he wasn’t well versed with the technology behind it. But his NFT, a signature digital toy face of the artist Frida Kahlo, sold for around 3.9 Ethereum (ETH) (approx Rs 6,63,651).”

∼ the Indian express

Not just Amrit Pal but many Indian artists are reaching out to Non-fungible tokens to create and sell their art digitally, some recent examples are :

  • Amitabh Bachchan has launched his poetry, punks and posters NFT.
  • Popular poet and writer Priya Malik  used the NFT marketplace over with some of her creations like ‘Broken But Beautiful.
  • DJ Shaan minted a masterpiece called ‘The Forbidden Tiger’.
  • Manish Malhotra, the famous designer launched five exclusive fashion-themed NFT’s and many more such entities have started entering the marketplace.

The catch here is if Non-fungible tokens(NFT’s)  are so popular and engaging, what’s the secret behind it? How can a common individual understand it and use them for gains?

Let’s decode the world of Non-fungible tokens.

What Is A Non-fungible Token?

Describing the word “Non-fungible” as any item that is non-interchangeable and ownership remains unique, gives us one point to judge the presence of Non-Fungible tokens as unique digital assets that can be traded with another unique asset, but cannot be held by more than one entity at a time.

For easy terminology, Non-fungible tokens are also referred to as NFT.  By using digital means in a digitalized world everything and anything is possible, NFT’s are a perfect example of this. As any form of art, music, real estate, game or any other assets can be traded in the form of tokens with the help of emerging blockchain technology.

These assets are permanent, secured and encrypted. Physical or digital, both types of assets can be converted into a Non-fungible token and can be traded through tech infrastructure for monetisation just like cryptocurrency (crypto) blockchain infra.

NFT drives the digital economy in new ways and give creators a way to sell to a global audience, where investors or rather the buyers of these assets have access to worldwide innovation. People have been using art to store value and investing in digital art or assets get them an opportunity to enter whole new horizons discovering modern approaches.

Acknowledging the fact that non-fungible tokens are in the initial phase of their creation and recognition, it is believed to attract more and more entities to join the market in the coming decade. In laymen terms, NFT as a word can be used to describe any unique asset that is converted into digital form using technology for NFT’s selling.

Working Of NFT’s

CreationCreation of Non-fungible tokens

The creation of NFT’s involve a minting process to be carried out through blockchain set up before you can finally list them for selling and this process works as follows:-

  1. Buying relevant cryptocurrency

    Once you are done with the creation of your physical or digital form of asset, you need to have some amount of cryptocurrency that is relevant for NFT marketplaces, taking the example of Ether (ETH), a cryptocurrency on Etherum blockchain, this is needed to enter the NFT marketplace once your asset is tech ready to be launched in the market. Anyone can buy ETH from any relevant cryptocurrency exchange.

  1. Setting up a non-custodial wallet

    The transaction related to NFT is done in non-custodial wallets where you would be required to transfer your purchased ETH before going further. Non-custodial wallets are a specific variant of a cryptocurrency wallet enabling total control over your funds.

    The wallet is an account to store and carry out transactions with cryptocurrency.

    Now you need to create a non-custodial wallet using any verified website or app such as Metamask, Rainbow, Coinbase. After you create a wallet on any of these sites, you can easily transfer your ETH from your cryptocurrency exchange wallet by using your wallet address.

    Interestingly, as we discussed that NFT’s never leave their original footprints and cannot be modified, this is possible due to the association of the initial wallet address with the NFT, which remains in the token forever.

  1. Selecting a marketplace

    Once you are done with wallet creation, now is the time to find a suitable marketplace, there can be many options like OpenSea, Raible that facilitate the minting of NFT. Choosing a perfect option depends on factors like gas fees, popularity, reliability and features.

What is gas fees? It is simply the amount that has to be incurred by the creator to list the NFT and as transaction cost, this fee is one time and is paid to the marketplace you choose for minting.

The catch is that here you are going to need the ETH that you previously transferred into your non-custodial wallet, the payment of gas fees has to be in the form of cryptocurrency only. However, for any buyer to your NFT, the buyer will compensate for the gas fees for you while buying. Gas fees are not rigid and change with market valuation and performance as a whole.

  1. Uploading asset as NFT

    All the steps above are done to reach this final stage, herein you need to access the marketplace and use the “create” feature.

    Authentication would work upon your non-custodial wallet address.

    Searching for options like adding new items or in similar terminology, you can easily add your asset in terms of files like audio, video, pictures. A plus point of minting is that the creator can mint the NFT from one marketplace and sell it across any other without restrictions.

And with this, your asset is now ready as a Non-Fungible Token to be traded on exchanges!


Once listed on the marketplace there is not much you need to do with hard procedures, as any buyer approaches the NFT, the amount price will be added to your wallet cutting gas fees for the first time sell-off.

However, you can make your NFT attractive or easier to sell by marketing it, not just through other platforms but also by adding notes and good descriptions while doing the minting process. Watching the craze and volumes of new NFT’s in the marketplace, it is essential to present something that attracts market players rather than just being listed as an asset.


Talking much on the creator’s side, we would focus on a market participant who is there to buy the unique tokens. Simple but mandatory steps that a buyer needs to carry out. Firstly, you would always require a cryptocurrency wallet in hand for enabling all the transactions, which supports the marketplace you want to enter. Having sufficient cryptocurrencies is a must to purchase the NFT’s.

Placing buy orders for any particular NFT will reduce the balance of your wallet and therefore a good to go transaction.

Price Determination

Just like other speculative markets, the price determination of NFT’s is driven by market forces of demand and supply. More demand accompanied by a unique one way supply will lead to higher valuations and bids.

Taking a simplified example, like TATA stocks in stock exchanges are all-time favorites for investors due to the reputation and accountability of the firm and therefore generate high speculative valuations in markets, here in NFT marketplace as well, art forms or pieces of famous artists, reliable company and relevant interests gain a big boom demands and hence valued higher than those of new or not yet brand named NFT’s.

The feature of pre-determinants for prices is also an important factor for the market. The buyer is free to choose any of the two options, that is either to list the asset at a fixed price or leave it on market auctions.

This option is enabled while the minting procedure. A similar feature is with the buyers as well, they can specify their price ranges before buying. This feature enables both sides of the market to place their capabilities in the market.

How NFT’s Are Used?

The non-fungible token is more than just a piece of code on a computer, the present and future scopes are huge as the technology-driven world is expected to rely on NFT based systems for more efficiency. Some of the cases where NFTs are put to judicious use are:-

Uses of Non-fungible tokens


Gaming as an individual industry has seen a big boom in overall demand and innovation, of course, innovation gives rise to uniqueness and here comes the need for NFT’s to generate a more reliable form of proof for uniqueness.

Gamers require in-game purchases of innovative materials like skins, characters, equipment etc. , developers by using NFT can earn profits on these innovations. Listing them as NFT and then gaining profit by selling, another way round would be royalty when the buyer sells it after using, by this they can maintain their development.

From the buyer’s point of view, it is easy for them to sell the NFT whenever they want on the marketplace and therefore has better prospects to play with financial gains.

The content of Artists

Talking about digital content that can be prepared by any artist starting from paintings, photographs, voice records, music, poems etc. to complex audios like music compositions, designer styling and much more to the list can easily be proved unique by the way of NFT creation and can be auctioned in the marketplace.

Tokenisation thus works in favour of artists to bring them forward for exposure as well as gaining income through exposure. They can even earn royalties as the created NFT goes from one hand to another after its initial sale, this empowers creators to exercise their proof of uniqueness and earn through it.

Physical ownerships

Physical ownerships can be in the form of a real estate property, car, any certificates, documents, etc. these can be recorded through NFT and can be permanently proved in the name of the owner. Not just the transparency would be maintained in buying, selling or recording these assets but also it is expected that digital systems in future might use cryptography mixed with NFT’s for security issues.

For example, your NFT for a house can be traded through a marketplace where you sell the NFT that states digital, as well as physical ownership of the house, belongs to the party who owns the token. This would be a simple process carrying transactions in cryptocurrencies.


DeFi is a term used for the phrase decentralised finance which essentially works on crypto-based platforms for working of loans and collateral. This works the same as normal financial institutions like giving some amount of cryptocurrency as collateral to lenders to buy some other type of cryptography related product. This gives lending and borrowing power to market players.

There can be two ways to use NFT’s with DeFi:-

  1. Collateral requirements

    Combining NFT with DeFi gives us more options of collaterals than just currencies. One can borrow by using NFT as collateral and therefore giving more autonomy to both borrowers and lenders.

  2. Fractional ownership

    How about an NFT worth USD 90 that be bought in USD 10 by you which gives you a similar proportion of ownership?
    This is how a composite NFT works with DeFi, a composite NFT is the one that can be purchased proportionally, just like shares in the share market. The worth of each proportion is determined by the number of entities and the total valuation as a whole. This feature gives better prospects to small market players to own bigger brands NFT’s. This owned share can be traded in the marketplace or any other decentralised crypto exchange that allows this feature.

Regulations Regarding NFT’s In India

Cryptocurrencies in India is a topic that is on fire in recent times due to the uprising share of Indians in crypto trading and the global hype of crypto-related products. Hereby it is observed a chaotic issue in light of RBI as well as the Finance Ministry, who are believed to form a framework to legalise NFT, cryptocurrencies and other forms of uses of blockchain technology.

Presently the regulations for all cryptocurrency-related matters is based on the Crypto-token regulation bill 2018. Currently, The Indian government has neither the NFT’s as legal nor have prohibited its trading in the country.

Some of the regulations specifically regarding NFT’s are:-

FEMA laws

FEMA laws are special laws that are made to look over the overseas transactions that happen during investment in NFTs as inter-country transfers involve investments therefore the law states that there has to be technology-based assets only that possess the qualities of intangible assets.
Another feature of the laws is that they allow Indians to invest in international NFT through fiat currencies that are reported to their authorized dealer banks only.

Copyright and NFT

Indian laws do not permit the free flow of NFT from one owner to another until and unless the “creator”  and the “owner” both are in an agreement to sell the NFT further. To safeguard copyrights, this regulation is in effect.

Income tax concerning NFT

According to the Finance Act 2020, any foreign entity that wants to sell its NFT in India needs to pay a 2% equalisation levy to the Indian government.

Advantages of Non-Fungible Tokens

Advantages of Non-fungible tokens

Proof of originality

The very first and most important advantage of NFT is that the creator gets the right of being the initial creator throughout life and gets recognition for the original work.

Another important implication is that no one can use copy and paste techniques on original content to create a duplicate, therefore, safeguarding problems of replicas about uniqueness.


Having no intermediaries involved with full technology-based procedure gives the users utmost transparency for the system of records, management and trading.

Using blockchain technology gives NFT recognition in ledgers and thus proving their uniqueness.  Market players feel reliable on the technology due to transparent procedures and information.

Economic opportunity

This platform gives creators a big opportunity to monetise their work and earn for what they create, moreover investors get a benefit to speculate on valuations and therefore buy or sell based on their needs and wants.

NFT marketplace thus gives economic benefits to all the users involved in trading.

Free Entry and Exits

Knowing the fact that there is no third party involved in an entry or exit, any entity whether big or small can enter the market at any point in time to either sell or buy the listed Non-fungible tokens.

This gives NFT a better mover advantage over other trading options as anyone can access the market according to their pockets without permission of any sort of regulators that might restrict the movement of entities.

Present-day valuation

Being newly popular, NFT’s marketplace can gain alarmingly super high trends in overall valuation, valuation of sales of NFT is recorded to an all-time high at $2.5 billion for the first half of 2021 in comparison to the previous year with $13.7 million. This uptrend over a year is due to more people being exploring blockchain technology and getting more indulged in investing habits other than stocks, physical assets, bonds etc.

Beeple, a renowned artist whose paintings are highly valued, sold his NFT named “Everyday: the First 5000 Days” which is recorded as the single most expensive NFT ever sold for about $69.3 million in US dollars. With that next highest valuations stand for NFT’s of Cryptopunks, these have been valued highest as collections in NFT marketplace worldwide.

Talking about the Indian marketplace, the highest bidding stood for Amitabh Bachchan’s ‘Madhushala’ NFT collection at $4,20,000 on Day 1, this accounts for about ₨31,399,407.

Such high bids on assets that have no guarantee to increase value in the future show how emotions and investing senses of market players are moving in the direction of diverting funds and enthusiasm to try new portfolio diversifications.

The volume of NFTs that are traded in the market has increased by 43% from April 2021 to June 2021, if seen from an analytical perspective, this increase in trade volume in 3 months can be a potential indicator of investor behaviour with regards to trading through blockchain technology and risk-taking ability.

Showcasing high valuations for tokens do generate a possibility of changing mindsets of investors not just internationally but also in the Indian scenario.

Future scope of NFT in India

Having talked about present-day valuations, we can get an idea about how future markets can be more inclined towards NFT and how investors might expose their risk-taking abilities to tech-oriented assets.

In India particularly, we saw a big boom in the cryptocurrency enthusiasm of investors, this boom might become the reason for more diversification of the NFT marketplace here, as more players will tend to enter shortly once more people are exposed to knowledge of technology and look forward to explore modern ways apart from traditional investing.

No doubt on the fact that awareness is one such factor that affects the investing approaches, just like crypto, initial phase shows hesitation on both the buy and sell-side for NFT but it is expected to become a bigger market as awareness and proper criteria accompanied with changing law and freedom brings more security to investors in India.


The originality of work and recognition was given to each NFT serves the purpose of creations as well as monetisation.

Having all the facts and figures analysed, it is believed that the coming world of digitalisation would involve Non-Fungible tokens as a means of investment with innovation. Not just that, but putting NFT’s in use of ownership for specific documents like identity cards, licenses etc might gain importance in upcoming years.

The ever-growing popularity among users of the crypto market for NFT is impacting the overall trend across the globe and therefore seeming to tap on economic opportunities, investors have been curious about modern-day trading.

All the new concepts of the digital revolution can be more enhanced with the support of laws that might when in favour will affect the ease of usage.

Further, as there is no guarantee of market stabilisation or sure short growth of the NFT market, the risk of investing is high and can be disruptive if not analysed by performances regularly.


Read More – Jumbo Loan : Everything You Need To Know [2021]

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