The definition of NFT first appeared in the year of 2017 with Crypto Kitties – a prominent cat game built on the Ethereum Blockchain. NFTs can represent assets in games, digital identity, etc., and are slowly changing the crypto-economic landscape.
A non-fungible token, which can be written as NFT, is a cryptographic token on the blockchain that certifies a digital asset to be unique. It can be a digital property or other real-world collectibles such as game items, works of art, music and videos.
Every NFT is secured on the blockchain and associated with a public address. However, what makes NFTs special from other tokens is, NFTs cannot be replaced and interchanged. A NFT acts as a proof of authenticity in the digital realm for virtual and physical assets. Furthermore, NFT cannot be copied or deported in any form without the permission of the owner, not even the issuer of the NFT.
In a more simple term, NFTs are tokenized assets with a unique and unchangeable proof of ownership.
Each NFT is generated individually and has a unique characteristic that distinguishes it from other NFT tokens.
Because each NFT is created as a one-of-a-kind object, rarity is an inherent feature, or in other words, NFT’s worth is derived from its rarity.
It is possible to buy, sell and trade a fraction of Bitcoin and Ethereum, for example 0.1 BTC or 0.5 ETH. However, NFT cannot be divided; each NFT must be traded as a whole, much as you can’t sell a splitted photograph.
Digital communications have been transformed by NFTs. Hence, let’s look at several benefits of this cryptocurrency.
NFTs are purchased and traded on specialized marketplaces. The use of NFTs depends on their originality. Since NFTs exist on a blockchain, they allow for peer-to-peer (P2P) transactions. This is a significant benefit for creators who want to bypass the middlemen and offer their digital goods straight to their fans.
Non-fungible tokens (NFTs) are created using the blockchain technology, which makes it trustworthy. As a result, counterfeiting is difficult with a decentralized and permanent record.
A NFT purchase is equivalent to purchasing the license to use, copy and display the information stored in this token.
NFTs can be applied to various aspects. In theory, they represent unique items or assets that need to be provided a conclusive ownership. Here are some fields that NFT has stepped into.
This is certainly not a new idea; the blockchain technology has broadened the appeal and growth of online gaming. One disadvantage of online games is that the characters and items are owned by the publisher. NFTs come to the rescue; players are able to create the tokenized assets of their own and even make a profit by selling them.
NFTs can also be used to tokenize real properties in an abbreviated amount of time to increase the liquidity for markets such as real estate, fine arts, etc.
NFT can also tokenize virtual assets. For example, we can own “virtual land” on Decentraland and Sandbox that have real values. We are allowed to build a whole game world on our piece of land on Sandbox.
To increase personal privacy and data integrity, we can store our identity and ownership data on the blockchain.
Information encrypted in an NFT’s smart contract can prove the identity of its recipient or owner.
NFTs are also used to encrypt certificates, software licenses, warranties, or both birth and death certificates. It can be stored in digital wallets for easy access, representation and especially ownership.
An NFT can be made by anyone. All you need is a digital wallet, some ETHs, and access to an NFT marketplace where you can upload and convert your work into an NFT or crypto art. Isn’t it simple?
For beginners, there are 3 things to consider before a NFT purchase: a marketplace to buy from, a digital wallet to store in, and the token needed to complete the transaction.
We recommend the following marketplaces:
6. Myth Market
Be aware of fees! Some marketplaces charge a “gas” fee, which is the amount of energy required to conduct a blockchain transaction. Other fees may include the cost of converting dollars into ETH/BTC/etc. (NFTs are sold in cryptocurrencies) and closing costs.
NFTs can also be sold on marketplaces, however the process on different platforms may vary. Basically, you’ll post your original work to a marketplace and then follow the procedures to convert it to an NFT with details like a work description and pricing suggestions. The majority of NFTs are sold for Ethereum.
To sum up, NFT’s market capitalization is still extremely small: around 30 million dollars in 2017 and 300 million dollars currently. NFT is a novel technology that may be integrated into the present DeFi trend and still has considerable room for growth.