This news made headlines on almost every major news coverage website. To most people, digesting the word ‘NFT’ would have been a little difficult as to what the heck this is. This article/blog will take you through NFT, what they are, how NFTs are used, how they work, how to buy an NFT, and the platforms where you can execute a trade.
What is an NFT?
Non-Fungible Tokens (or NFT) are digital assets that represent real-world collectibles and are recorded in smart contracts. A fungible token is divisible and doesn’t possess a unique identification. (Eg. Bitcoin) A non-fungible token is unique and can’t be directly replaced by the other token.
CryptoCrystal breeds sentient metals into new cartoon characters where breeding is called melting as in the crystals are melted together.
The way to get fresh crystals is to go mining, but it’s not mining like on Bitcoin or Ethereum, instead, users just buy a sort of token called a pickaxe from the company and use it. This generates a variable amount of crystals.
Non-Fungible tokens represent items of value such as art, music, videos, and in-game items. They are unique and used to prove the ownership of digital items.
The fungible tokens such as coins, banknotes, and cryptocurrencies are identical. They can be traded to bring the same piece again as they have the same attributes and value when they are exchanged.
How is NFT used?
Non-fungible tokens are used for high-value collectibles that are differentiated from each other. No same tokens would be ever found.
These types of tokens have dedicated digital marketplaces such as Openbazaar, Decentraland and are not traded in regular cryptocurrency exchanges.
How does NFT work?
Non-fungible tokens are powered by blockchain that is a distributed public ledger holding transactions. Non-fungible tokens can also be created on other smart-contract-enabled blockchains with non-fungible token tools and support. Though Ethereum was the first to be widely used, NEO, EOS, and TRON now have NFT standards.
Non-fungible tokens and their smart contracts help store important information such as the identity of the owner, rich metadata, or secure file links. The potent of non-fungible tokens to immutably prove digital ownership is an important progression for an increasingly digital world. They could see blockchain’s promise of trustless security applied to the ownership or exchange of almost any asset.
How to buy NFT tokens?
Non-fungible tokens can be brought in from a variety of marketplaces but before that, there are some prerequisites to follow in order to purchase your first NFT.
- A digital wallet is required to store the non-fungible tokens and cryptocurrencies (if any).
- Check for the payment method your preferred marketplace accepts. Most of the marketplaces accept a wide variety of cryptocurrencies such as Bitcoin, Ethereum, etc.
- Go over to a decentralized (eg. Uniswap) or centralized (eg. Binance) exchange to purchase your cryptocurrency.
- Go over to the marketplace and own your first NFT.
Where can I buy NFT tokens?
There are a ton of marketplaces available for you to buy non-fungible tokens of your choice. The below list has been shortlisted on parameters so you can hover to their website and make a purchase.
Decentraland focuses on the gaming sector that is the world’s first fully decentralized game world, built on the ERC-20 token MANA. The MANA taken helps users to use services, buy goods, or plots of virtual land (LAND token).
In its ICO, the MANA token raised $20.7 million and got sold out within five minutes. A subsequent auction of LAND saw users spend 161 million MANA to buy virtual plots around $15 million at current prices.
The marketplace also supports a number of other NFT such as CryptoKitties, Axie Infinity, other than LAND.
This marketplace works on a different concept. The artists must receive upvotes or an invitation from fellow creators to post their art. The creators are required to purchase gas to mint non-fungible tokens.
Chris Torres, a creator at the Foundation platform, sold Nyan Cat, an NFT. The token could be a little on a higher note but with the rising demand for NFTs, it is totally justified.
The name itself implies a marketplace hosting rare and valuable pieces of work. SuperRare is also one of the leading players in the NFT-powered digital art space.
The marketplace runs on Ethereum blockchain that ensures a fair share and value of artists’ work. So far, over 11,000 pieces of artwork have been collected by users as of Dec 20, 2020.
The platform has generated massive sales with over $46 million earned collectively by the artists curating the content.
Rarible is a democratic, open marketplace ( or a decentralized application, DApp) that allows artists and creators to issue and sell NFTs. Rarible launched RARI, a governance token that’s used to reward creators and collectors to participate in community rules.
Unlike other tokens which can be bought, RARI tokens can only be earned through active participation on the platform, a process Rarible terms marketplace liquidity mining.
The Future of NFTs
Of all the marketplaces listed in this blog post, the focus was mainly on the gaming and artwork industry. There are a lot of marketplaces already signing creators, and by the time you would finish reading the blog, some of the NFTs would have already sold!
Non-Fungible tokens add potential to the creation of security tokens, the tokenization of both digital and real-world assets. Imagine if the physical piece of land could be made into a non-fungible token to prove the ownership of the property. This will not only lead to proper traceability but also prove ownership in the incidence of a partial token being sold.
The NFTs can have varied applications not only limited to artwork. Certificates, Documentations, licenses, etc. could be made as a non-fungible token. The smart contract of a non-fungible token immutably proves the identity of the recipient or owner and could be stored in a digital wallet for ease of access and representation.
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