Non fungible tokens or NFTs, have tons of use cases: gaming, art, even yield farming. What exactly are they? In this article, we will share the basics of NFT concepts, and explain why NFTs are gaining popularity in the crypto market.
NFT (non fungible token) is a special cryptographically generated token that uses blockchain technology to link to a unique digital asset that cannot be copied.
The use of NFT is now widespread in many different industries, for example in the areas of games and digital collectibles.
NFT is built on ERC-721 (Ethereum) and BEP-721 (Binance Smart Chain) standards.
Nội dung bài viết
- What is a non-fungible token?
- Characteristics of Non Fungible Tokens
- How are non Fungible tokens being used?
- The idea of NFTs as an investment portfolio.
- Two most successful NFTs of all time.
- Top 5 NFT Projects
- Where can you buy and sell NFTs?
- The Future of Non-fungible Token
What is a non-fungible token?
What makes Non-Fungible Token special, learn the difference between Fungible and Non-Fungible.
Fungible: Can be easily replaced by something identical and easily interchangeable.
Fungibles can include rice varieties, shopping vouchers or simply a $100 check. If you lend someone a rice, they can give you another bag of rice just like that.
All of this will change in the case of Non-fungible tokens.
Non-fungible will have unique information or properties that make them non-fungible or non-interchangeable.
Non-Fungible Tokens are simply understood as non-fungible tokens, a new group of digital assets that have emerged in recent months.
Airline tickets are the easiest to understand example. A ticket looks the same as any other, but each has a different passenger name, destination, departure time and seat number. Therefore, if you exchange this ticket for another ticket of the same price, you will still not be able to redeem the equal benefit.
Characteristics of Non Fungible Tokens
Rarity – The value of NFTs is accepted from their scarcity.
NFT developers can create any number of non-fungible tokens, but they usually limit the number of tokens to increase rarity.
This helps NFT tokens increase in value, becoming more sought after, especially for NFTs on the collectibles list.
Non–Divisible – Non fungible tokens are not divisible into smaller units.
Example: You want to buy 1 painting, if this painting is 1 NFT then you will need to buy 1 NFT, or you won’t buy them. You cannot buy 0.5 NFT or units less than 1.
Uniqueness – This is perhaps the most important characteristic of NFT tokens.
Each NFT token has a fixed information tab that records their uniqueness. This information is considered as a certificate of authenticity.
How are non Fungible tokens being used?
Game apps, play games
NFTs are very popular in the gaming industry, as these tokens solve some of their inherent problems.
However, with NFTs, these features can easily be transferred and used in different games. As such, non fungible tokens can help drive in-game economies.
Take Decentraland for example. Here, participants can purchase virtual land. Another closer example is ENS.
Identity, Authentication, security
NFT is ideal for combating identity and brand theft.
Examples include our education, medical records, and even our physical appearance. All can use NFT’s technology instead.
Other examples : Artists may turn their work into NFT for copyright purposes.
NFT brings a new dawn to the world of collectibles, conventional collectors are now taking to digital assets.
The idea of NFTs as an investment portfolio.
The idea of NFT as an investment portfolio has gained wider recognition. It is catalyzed by RARI liquidity mining and a new understanding of the potential applications of digital ownership through NFT.
There are currently several major categories to capitalize on the growth of the NFT sector:
- Collections and individual NFTs
- Financial products, derivatives and NFTs
- Layer-1, layer-2 platform tokens that support NFTs-based protocols and projects
- NFTs Platform Governance Token
- Social tokens related to NFTs
- NFTs . Platform and Infrastructure
Two most successful NFTs of all time.
Digital art artists have used non fungible tokens to create NFT art. One of the things that has made this NFT so appealing is the amount of money artists are fetching on the NFT marketplaces.
Data from CryptoArt, an analytics platform focused on crypto art, indicates that the total volume of NFT-based artworks reached $8.2 million in the last month of 2020. is a significant increase when the number was only $2.6 million a month earlier.
The market size of the entire collection is now worth more than $130 billion. The growing market value indicates a shift from viewing collectibles as a mere hobby to a major financial move, such as speculation.
CryptoKitties is a popular game on a decentralized protocol powered by ETH that allows to collect, buy, sell, and breed virtual cats.
Using smart contracts, Kitties owners and breeders can trade their virtual cats. Not only do they attract attention, but they also make a lot of money on NFT marketplaces like OpenSea.
Other examples – CryptoPunks
An NFT “Alien” CryptoPunks made headlines when it sold for a staggering $760,000 in January 2021 equivalent to 605 Ethereum.
Top 5 NFT Projects
NFT space is growing very fast, NFT-focused products and projects are also increasing. These range from gaming networks to NTFP markets. Here are the top five NFT projects.
Async is another irreplaceable token artwork marketplace that allows you to not only buy and sell your NFT, but also to create one.
The platform has a number of programming features that allow art creators to easily define the form and behavior of their artwork.
This is the premier marketplace for NFT art and collectibles. The items listed range from ENS to virtual pets and plots of land.
Although we discussed this project above, it still deserves to be on the list of top NFT projects as it brought the whole NFT game to the limelight.
Ethereum Domain Name Service (ENS)
This is a domain name service project born in mid-2017. The .ETH domain name is an NFT using Ethereum’s ERC-721 standard and is tradable on the NFT market.
Decentraland is a leading NFT project focused on distributed virtual worlds. Here, participants can purchase virtual land. Furthermore, each “resident” has a unique identification digital passport.
Where can you buy and sell NFTs?
You can buy NFT at NFT marketplaces: OpenSea, Rarible and Nifty Gateways… are some of the most popular NFT marketplaces as of April 2021.
There are also more niche markets like NBA Top Shot, which is dedicated to NFTs featuring basketball videos or valuable tweets like that of Twitter CEO Jack Dorsey.
Here are the steps to participate in NFT trading:
First you need to prepare a cryptocurrency wallet to buy and store NFT. Of course there must be money in the wallet. NFT markets use Ethereum as the base currency, and operate on an auction model.
Next step, you need to connect the wallet to the NFT marketplace where the product you want to buy is located. In particular, when paying, you need to see the transaction fee, because sometimes the gas fee on the Ethereum network is higher than the NFT product you are about to buy.
After completing the payment, the NFT tokens will be returned to your wallet. Now all you need to do is wait for a good time, when the NFT is worth more, you can sell it.
The Future of Non-fungible Token
Non-fungible Tokens are being implemented in gaming and crypto collectibles. For games, NFTs can be used to represent in-game items such as skins. Also, allow them to be transferred to new games or traded with other players.
Non-fungible Tokens add the potential to create security tokens that also encrypt digital assets. Additional NFTs can be certifications, software licenses, warranties, or both birth and death certificates. The smart contract of a Non-fungible Token always proves the identity of the recipient or owner. It can be stored in a digital wallet for easy access and representation.
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