BASICS

1. What is a Non Fungible Token (NFT)?

A Non-Fungible Token (NFT) is a type of digital asset that represents ownership or proof of authenticity of a unique item or piece of content, such as artwork, music, videos, or virtual real estate, on a blockchain. Unlike cryptocurrencies like Bitcoin, NFTs are indivisible and cannot be exchanged on a one-to-one basis, as each NFT has a distinct value and identity. This uniqueness makes NFTs valuable for collectors and creators in the digital world.

2. What is a blockchain?

A blockchain is a decentralized and transparent digital database that stores information in the form of blocks, which are linked together. Each block contains a list of transactions or records and is cryptographically secured. What makes a blockchain unique is that it is collectively managed by a network of computers rather than a central authority. This helps prevent manipulation and establishes trust. New blocks are continuously added, creating an immutable and chronological record-keeping system. Blockchains are used in various applications such as cryptocurrencies, supply chain management, smart contracts, and more.

3. What is an NFT domain?

An NFT domain or web3 domain refers to a domain name that is associated with a Non-Fungible Token (NFT) on the web3 or blockchain network. It represents ownership and authenticity of a unique domain name on the decentralized web. NFT domains can be bought, sold, and traded like any other NFT, and they provide the ability to establish digital identity and ownership in the online space.

4. Do I need cryptocurrencies in order to buy NFT domains?

Yes, in most cases, you will need cryptocurrencies to purchase NFT domains. Most NFT marketplaces where NFT domains are traded accept cryptocurrencies such as Ethereum (ETH) as a form of payment. You will need to possess the relevant cryptocurrency to complete the purchase of an NFT domain. It’s important to note that the specific requirements may vary depending on the platform, so you should check the specific payment options of the marketplace where you intend to purchase the NFT domain.

At Unstoppable Domains, it is also possible to pay with credit card or PayPal, in addition to cryptocurrencies such as ETH or BTC.

5. Where do I keep my NFT domains?

NFT domains are typically stored in digital wallets that are compatible with the blockchain on which the NFTs are issued. These wallets can be categorized into two main types: custodial wallets and non-custodial wallets.

  1. Custodial Wallets: Some NFT marketplaces and platforms offer custodial wallets where you can store your NFT domains. With custodial wallets, the platform holds your private keys on your behalf, providing convenience but potentially sacrificing full control over your assets. Examples of custodial wallets include wallets provided by NFT marketplaces like OpenSea or specific platforms like Unstoppable Domains’ integrated wallet.
  2. Non-custodial Wallets: Non-custodial wallets give you complete control over your NFT domains as you hold the private keys. These wallets are software applications or browser extensions that allow you to interact directly with the blockchain. Popular non-custodial wallets for NFTs include MetaMask, Trust Wallet, and MyEtherWallet. With non-custodial wallets, it’s crucial to securely back up your private keys or seed phrases to ensure you can access your NFT domains even if you switch devices or lose access to your wallet.

It’s important to note that different blockchains may have their own specific wallets, so you should choose a wallet that is compatible with the blockchain on which your NFT domains are issued.

6. How do I sell or transfer my NFT domains?

To sell or transfer your NFT domains, you would typically follow these steps:

  1. Choose a Marketplace: Select a suitable NFT marketplace where you can list and sell your NFT domains. Popular NFT marketplaces include OpenSea, Rarible, and Foundation.
  2. Set up an Account: Create an account on the chosen marketplace. This may involve linking your digital wallet (where your NFT domains are stored) to the marketplace.
  3. List Your NFT Domain: Create a listing for your NFT domain on the marketplace. This involves providing details such as a description, images, and a desired selling price.
  4. Choose a Sale Method: Decide on the sale method for your NFT domain. You can choose between setting a fixed price or opting for an auction-style listing where potential buyers can bid on your domain.
  5. Complete the Sale or Transfer: Once a buyer is interested in purchasing your NFT domain, they will initiate the transaction. Follow the instructions provided by the marketplace to finalize the sale or transfer. This usually involves accepting the buyer’s offer and transferring the ownership of the NFT domain to their wallet.
  6. Confirm the Transaction: After the transfer is complete, make sure to verify that the transaction is successful. Check your wallet and the blockchain explorer to ensure that the ownership of the NFT domain has been transferred to the buyer.

It’s important to note that each marketplace may have its own specific steps and requirements for selling or transferring NFT domains, so it’s advisable to familiarize yourself with the platform’s guidelines and instructions.

7. How do I cash out the proceeds of an NFT domain sale?

To cash out the proceeds of an NFT domain sale, you would typically follow these steps:

  1. Transfer Sale Proceeds to an Exchange: Send the proceeds of your NFT domain sale, which you typically receive in cryptocurrency, to a cryptocurrency exchange platform that supports withdrawals in your desired fiat currency (e.g., USD, EUR).
  2. Sell Cryptocurrency for Fiat: On the exchange, sell the cryptocurrency for your preferred fiat currency. This can usually be done by placing a sell order on the exchange’s trading platform.
  3. Withdraw Fiat to Bank Account: Once you have successfully sold the cryptocurrency, withdraw the fiat funds from the exchange to your linked bank account. This may involve providing the necessary banking information and following the withdrawal process specified by the exchange.
  4. Monitor Transaction and Fees: Keep track of the transaction process and be aware of any fees associated with cryptocurrency conversions, sales, and fiat withdrawals. Different exchanges may have varying fee structures.

It’s important to note that the specific steps and requirements may vary depending on the exchange and the jurisdiction in which you reside. It’s recommended to consult the exchange’s guidelines and consider any tax obligations related to converting cryptocurrency to fiat.

8. What is a decentralized digital identity (DID)?

A decentralized digital identity (DID) refers to a concept where individuals have control over their own digital identities without relying on central intermediaries such as governments or companies. It enables users to create, manage and own digital identities based on public blockchains or decentralized identity networks.

In contrast to traditional centralized identity systems where a central authority manages identity information, a decentralized identity system allows users to control and selectively disclose their identity data to whom and when they choose. DIDs also facilitate interoperability between different services and platforms as they are based on open standards like the W3C (World Wide Web Consortium) DID specification framework.

By leveraging cryptographic keys and smart contracts, a decentralized identity system enables users to securely manage and authenticate their identities. It also offers potential benefits such as improved privacy, protection against identity theft, and the ability to reuse identity information across various services without the need to re-enter it every time.

Overall, a decentralized identity system aims to give users more control over their identity data, enhance security, and strengthen trust in digital interactions.

9. What is a smart contract?

A smart contract is a self-executing contract with the terms of the agreement directly written into lines of code. It is deployed on a blockchain network and automatically enforces the terms and conditions of the contract without the need for intermediaries. Smart contracts enable trustless and decentralized transactions by ensuring that the agreed-upon conditions are met before the execution of the contract.

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