How NFTs Work, NFTs Main Problem and How to Solve It

Introduction

If you are new to Web3, then you’ve probably googled “What is an NFT and how does it work?” at some point. There is a lot of information online some helpful, some overwhelming.

That’s why in this article, I’m breaking down only what you really need to know about NFTs.

By the end of this beginner-friendly guide, you’ll understand:

• What an NFT is (in plain English)

• How NFTs actually work

• The number one problem with NFTs today (and why no one’s fixing it)

• How you, as a beginner, can get started with confidence

Let’s simplify NFTs once and for all.

What exactly is an NFT in simple terms?

NFT stands for Non-Fungible Token. So basically unlike a crypto coin, an NFT is a digital item that is one-of-a-kind and cannot be swapped 1:1 which means you cannot just trade it for an exact item of the same kind like you would do with money.

Think of it like a digital certificate of ownership stored on the blockchain.

Real Life Example of an NFT:

Let’s say you buy a digital artwork or a rare game skin. An NFT is your proof that you own the original version of that digital asset even though copies might exist online.

Unlike Bitcoin (which is fungible, meaning every coin is identical), each NFT is unique.

How Do NFTs Work? (The Simple Version)

NFTs are powered by blockchain technology, usually on Ethereum, Polygon, or Solana.

Here’s what happens with NFTs behind the scenes:

1. A creator uploads a digital file. It could be art, music or even a video and "mints" (this is basically the process of how an NFT is made) it as an NFT.

2. The blockchain records:

   • who created it,

   • the unique ID of the NFT,

   • and its transaction history. (all this information is called MetaData)

3. You can buy, sell, or trade that NFT on marketplaces like OpenSea or Magic Eden.

4. All of it is transparent and tamper-proof thanks to blockchain.

This setup is why NFTs are often called “trustless” you don’t need to trust a middleman to prove ownership because its all recorded digitally on the blockchain.

What’s the Main Problem with NFTs Right Now?

Now, here’s the truth most people don’t talk about when it comes to NFTs:

The media file isn’t stored on the blockchain only a link to it is.

This means:

• If the server that hosts the artwork goes down

• Or the marketplace disappears

• Your NFT might just point to a broken link.

That’s like owning a house, but the deed only links to a photo of the house on someone else's website.

How Can We Fix The NFT Centralised Storage Problem?

a. Use Decentralised Storage:
New solutions like IPFS (InterPlanetary File System) and Arweave let creators store the actual file in a decentralized way. That way, the NFT isn't just a link it points to a real, permanent record.

b. Educate Buyers and Creators:
We need better NFT standards and platforms that make proper education about NFTs the default not just an option.

c. Token Standards Matter:
NFTs on Ethereum follow token standards like:

• ERC-721 – basic NFT standard

• ERC-1155 – supports semi-fungible tokens (great for gaming and collectibles)

Choosing platforms that respect these standards should help improve the NFT security and usability.

How to Get Into NFTs as a Beginner

As a beginner looking to get into NFTs, here’s a safe way to start:

1. Get a Crypto Wallet:

   • Try MetaMask or Phantom.

   • Store your private key safely.

2. Add Crypto Funds:

   • Buy small amounts of ETH or SOL to use on NFT marketplaces.

3. Explore Reputable Marketplaces:

   • some popularly known ones are OpenSea, Rarible, Zora and Magic Eden.

4. Research Projects Before You Buy:

   • Avoid unnecessary hype. If it looks too good to be true then it probably is. Check the team, roadmap, and storage details.

5. Consider Creating Your Own NFT:

   • Use tools like Manifold Studio to try your hands on minting your own NFT without coding. Creating your own NFT gives you more control of ownership than you would have if you do it in a marketplace.

Finally, NFTs Are Still Evolving

NFTs are more than overpriced JPEGs. At their core, they are a way to prove ownership in the digital world. But they are not perfect.

If you are aware of the underlying issues like centralised storage you will make smarter decisions and possibly help shape a more decentralised, trustworthy NFT ecosystem.

What Next?

• Share this guide with someone still confused about NFTs

• Subscribe to my blog for more Web3 breakdowns

• Connect with me on LinkedIn for professional enquiries.

Learn more about NFTs and how they work here: