Big data technology has led to some other major technological breakthroughs. We have talked in detail about applications of big data in marketing, financial management and even the criminal justice system. However, there are other benefits of big data that get less attention, even though they are also remarkable.
One of the newer applications of big data is with NFTs. The entire concept of NFTs is actually predicated on big data.
How Big Data is Creating a Booming Market for NFTs
Non-fungible tokens – or simply NFTs – have gained global recognition in recent years. They have been responsible for the significant changes across various sectors, including art and finance. As a result, many have posited the possibility of every part of society being influenced eventually by NFTs.
This might sound overblown, yet it is not. The past few years have demonstrated the potential effects that NFTs can have – being one of the most significant innovations – in sports, fashion, and tech, among others. Since NFTs became a norm in 2021, it has attracted all sorts of media hype and drama.
NFTs have been made possible due to advances in big data. Praphul Chandra, Founder and CEOof Koinearth wrote an article for The World Economic Forum titled If data is the new oil, then enterprise NFTs are the tankers. Here’s why. Chandra pointed out that there are many wonderful benefits of treating data as an asset, but there are logistical issues that make that difficult. NFTs have helped mitigate many of these challenges.
However, it can prove difficult to fully fathom the dramatic rise these tokens have enjoyed in recent times. To lend you a hand, this comprehensive guide will provide an insight into what NFTs are and how they work. Let’s dive in!
What are NFTs?
Non-fungible tokens are a unit of data on a blockchain network, which can offer stable proof of ownership when linked to a physical or digital asset. These tokens often contain data that can be connected to songs, images, avatars, and videos, among others.
Despite this, they can also help owners gain exclusive access to digital or live events, as well as being connected to physical assets, such as cars and more. Big data creates opportunities to make the most of NFTs. With this in mind, it is safe to affirm that NFTs can enable users not just to create items but buy and sell assets safely on blockchain technology.
However, it must be stressed that you can’t purchase intellectual property rights or copyright of the underlying asset, except stated otherwise. However, trading NFTs is not so straightforward. The next section will explain better.
Creating, Buying, Selling and Valuing NFTs with Data Science
As stated earlier, dabbling into NFTs is not so simple. Fortunately, data science has made it a lot easier to take advantage of them, as Dr. Stylianos Kampakis discusses in this post in The Data Scientist. To purchase one, cryptocurrencies are used to fund an NFT account while using a crypto wallet to safeguard the data when an NFT is bought.
You are also going to have to know how to value them. This is where data science becomes especially valuable.
There are various tools that can enable traders to make the most of NFT derivatives, including NFT Profit. The steps below will provide more insight into how to create and trade NFTs:
Acquire a crypto wallet
Crypto wallets are used to store digital assets. You can choose between a software or hardware wallet. However, while the former is more suitable for short-term trades, the latter is a safer means of storing and transferring valuable assets.
You can use data analytics tools to choose the best cryptocurrency wallet. You can find out more about that in this post.
Purchase a Cryptocurrency
The cryptocurrency sector is benefiting tremendously from data analytics. One of the benefits is that analytics helps investors time their purchases and select the best cryptocurrencies.
You will come across several NFT marketplaces that allow the use of traditional methods of payment. These include MakersPlace and Nitty Gateway. A lot of data analytics tools help you assess the quality of different marketplaces. You should also look at reviews of them to find the best. On the other hand, OpenSea and SuperRare only support cryptocurrencies. ETH is the best crypto for NFT transactions since most NFTs are part of the Ethereum blockchain at a high level.
Choose a Marketplace
Before choosing a marketplace, consider whether you need to mint a single NFT or a collection of these tokens in a batch. OpenSea represents one of the best places for the latter. You can also consider Rarible and LooksRare as well. Besides this, you should know that minting is associated with initial costs, which could be in the form of a transaction fee in some marketplaces. You should also acquaint yourself with royalty splits.
Mint a new NFT
Ensure that you must hold the intellectual property rights and copyright for the item you wish to mint before picking an item. This process is crucial since you can easily end up having legal issues if you create tokens by using assets that are not yours. You can create an account at your preferred marketplace. Then, you can start minting.
It is worth noting that some NFTs might only be purchased on the open market. However, you can buy your favorite NFTs immediately or, in some cases, make a bid on your preferred NFTs and wait until the closing of the auction.
Value Your NFTs
Data analytics can be used to value NFTs. Kampakis and one of his students developed a hedonic regression method with one of his students to value CryptoPunk. He points out that the same data analytics approach can be very useful or valuing other NFTs.
Big Data Has Made NFTs Valuable New Commodities
NFTs have grown in recognition across the far reaches of society. Big data has played a huge role in this sudden new market. NFTs serve so many purposes as a crucial modern innovation. However, creating, buying, and selling these tokens are not so simple. You must acquaint yourself to prevent getting into trouble during NFT transactions. The good news is that data analytics makes all of these steps easier.