NFTs have been in everybody’s ear over the past few weeks and don’t seem to go away any time. Jack Dorsey sold a NFT for his tweet, so did Elon Musk. We saw NFTs for art work, collectibles, in-game items, and more. So what are those NFTs actually and what can we use them for?
NFT quickie (details further down the road)
Non-fungible tokens, or NFTs, are digital assets that are indivisible and provably unique. They can be used to represent both tangible and intangible items.
What does that mean?
Non-fungible tokens (NFTs) are digital assets that are provably unique, creating digital scarcity. They can’t be duplicated or divided.
They can be used for digital collectibles, music, artwork, and in-game tokens, among other things.
Cryptocurrencies, utility tokens, protection tokens, and privacy tokens are just a few examples. Along with cryptographic and blockchain technology, digital assets and their classifications are multiplying and changing.
Non-fungible tokens (NFTs) are another example of the industry’s rapid development. We’ll look at what they are, how they work, and how they’re used in this guide.
Ok, more details please. What EXACTLY are non-fungible tokens?
Non-fungible tokens are intangible assets with unique identifiers contained in smart contracts.
The notion of trustless, digital scarcity was implemented with the advent of Bitcoin. Before it, replicating anything in the digital world was extremely inexpensive. Programmable digital scarcity has become possible due to blockchain technology, which is now being used to link the digital and physical realms.
Non-fungible tokens (NFTs), also known as crypto collectibles, are an expansion to this definition. Unlike cryptocurrencies, where all tokens are generated in the same manner, non-fungible tokens are all one-of-a-kind and small in quantity.
NFTs was one of the most important components of a modern global economy based on blockchain technology. NFTs are being studied in a range of applications, including gaming, digital identities, licenses, credentials, and fine art. Furthermore, they could be able to allow for fractional ownership of high-value assets.
Each NFT is unique due to this knowledge, and as a result, they cannot be directly replaced by another token. Since no two NFTs are identical, they cannot be substituted like for like. Banknotes, on the other hand, may be easily substituted for one another if they are of equal value; the holder would not notice the difference between, say, one dollar bill and another.
Bitcoin is a currency that can be traded for other currencies. You can send one Bitcoin to someone, and they can send one back to you, and you’ll only have one Bitcoin. (Of course, the value of Bitcoin can fluctuate during the transaction.) Since fungible tokens are divisible, you can send or receive smaller quantities of one Bitcoin, measured in satoshis (think of satoshis as Bitcoin cents).
Non-fungible tokens are not divisible in the same way that a concert ticket cannot be submitted in half. A part of a concert ticket will be useless and non-redeemable on its own.
Collectible CryptoKitties tokens were among the first non-fungible tokens. Each CryptoKitty is a one-of-a-kind blockchain-based digital kitten; if you give someone a CryptoKitty and then receive one from someone else, the CryptoKitty you receive would be entirely different from the one you sent.
A non-fungible token, such as a CryptoKitty, has its unique information stored in its smart contract and immutably registered on its blockchain. CryptoKitties were first published as ERC-721 tokens on the Ethereum blockchain, but have since switched to their own blockchain, Flow, to make it easier for beginners to get started with crypto.
In late 2018, one player in the video game Decentraland was so desperate to switch to a “better place” that they were willing to part with 2,800,000 MANA to buy a land piece in-game. That was worth more than $215,200 at the time of the transaction.
What else can I use non-fungible tokens for?
Non-fungible tokens may be used with digital objects that need to be distinguished from one another in order to show their worth or scarcity, as well as crypto-collectibles like CryptoKitties. Anything from simulated land plots to artworks to ownership licenses may be portrayed using them.
Non-fungible tokens are purchased and exchanged on decentralized marketplaces such as Openbazaar or Decentraland’s LAND marketplace, rather than on traditional coin exchanges.
Give me more tech info about how NFTs work!
Alright, Nerd! 😉
Fungible tokens include Bitcoin and Ethereum-based ERC-20 tokens. ERC-721 is Ethereum’s non-fungible token standard, and is used by networks like CryptoKitties and Decentraland. With non-fungible token tools and support, non-fungible tokens can also be generated on other smart-contract-enabled blockchains. NEO, EOS, and TRON all have NFT specifications, though Ethereum was the first to do so.
Non-fungible tokens and their smart contracts allow for the addition of comprehensive attributes such as the owner’s name, rich metadata, and protected file connections. The use of non-fungible tokens to show digital possession in an increasingly digital environment is a significant step forward.
Non-fungible tokens, their protocols, and smart contract technologies are still being developed, as is the case with blockchain to date. Developing decentralized software and systems for non-fungible token management and development is still a challenge. There’s still the question of defining a norm. Many developers are operating on their own blockchain ventures, which makes blockchain architecture fractured. Unified protocols and interoperability can be needed for performance.