Everything You Need to Know About NFTs

NFT's

NFT stands for Non-Fungible Token. An NFT is simply a token that defines unique digital assets, I.e., not fungible. NFTs are considered “unique” because each of them has different attributes or properties that can be used to describe them or their history/provenance.

The concept of the non-fungible token was first discussed by the ERC721 standard, which has been used to tokenize digital assets on the Ethereum blockchain. The implementation of the standard included a smart contract that could store metadata about each unique asset in an NFT.

How do I start creating NFTs?

In order to create a unique token on the Ethereum blockchain, you must first define its properties. This can be done through an ERC-721 smart contract. Once created, each item is assigned a unique ID number which other players will use to reference it or trade it in a marketplace. Jungle is one of such market places where you can buy, sell, or even create NFTs. The platform allows you to set up your wallet, build your collection, and list NFTs for sale.

Here are steps to creating your NFT:

  1. Define the structure of your token contract.
  2. Open a wallet account to start transferring funds into it.
  3. Deploy your contract to the Ethereum blockchain.
  4. Wait for one confirmation from the network before using the NFTs you have created.
  5. Congratulations! Now you have your very own non-fungible tokens to use in any way you see fit.

NFTs can be used for many different purposes, such as tracking ownership of a digital asset, establishing rights to a digital asset, and building unique digital assets with specific properties or abilities.

For tracking ownership of real-life or digital items.

Non-Fungible Tokens (NFTs) are tokens that represent ownership over a unique digital asset. They are different from cryptocurrencies because they do not all function the same way. The term “token” is used to describe individual instances of NFTs which are tracked on the blockchain. All of the tokens are unique and cannot be replaced or substituted for one another. They do not provide any kind of currency function, nor can they be traded like cryptocurrency.

To establish rights of digital assets.

NFTs are usually issued on top of existing blockchains. On Ethereum, they are deployed as smart contracts that contain the properties and functions to manage NFT tokens. This means that all tokens are compatible with any other token operating on top of the same blockchain because they use a common interface. Because all NFTs are tracked on the same blockchain, all the transactions are tracked and verified by a unified system.

What is a Non-Fungible Token?

A fungible token represents something that can be easily interchanged with another identical item. Think USD – if you have $10, you can interchange it for another $10 bill and the transaction will still be valid. Fungibility is one of the key elements that make currencies usable – nobody would use a currency if everyone’s dollars were printed with different serial numbers.

The defining factor of fungibility is that all items are identical or at least interchangeable – each one can be replaced by another with no loss of value.

Non-Fungible Tokens, on the other hand, are unique digital assets whose scarcity is ensured on the blockchain. This means there can only be a single NFT with a particularly unique combination of attributes.

Where did they come from?

The term was popularized by the CryptoKitties project, which made it famous when people were spending large amounts of Ether on digital cats in December 2017. But despite their recent popularity, NFTs have been around for a few years.

The idea of NFTs originates from the ERC721 standard, proposed in late 2017 by Dieter Shirley – one of the CryptoKitties co-founders. This standard defines the requirements that every token on the Ethereum blockchain must meet in order to be considered an NFT.

What makes them special

While there are several concepts tied to Ethereum like decentralized apps or tokens, NFTs stand out as a result of their uniqueness. Since only one ERC721 token with a specific set of attributes can exist, each individual asset is unique – exactly like art pieces in real life.

This means that every single CryptoKitty is unique and cannot be replaced by another one.

NFTs are digital tokens that can be created, bought, sold, or traded like any other cryptocurrency – but they’re also non-fungible assets with their own attributes. These properties make them unique digital assets which can’t be replicated once created.

What is an NFT good for?

NFTs are most often associated with video games, and this association makes sense. As we see more digital assets being tokenized, we will see a shift in how games are designed – particularly those that allow players to regularly earn assets or rewards of some sort. In the future, NFTs may even be used as rewards for playing games of chance.

In order to make non-fungible tokens easier for developers and players to use, Enjin Coin created the ERC-1155 standard. The ERC-1155 token model is not only forward-compatible with future NFT standards but also fits on a single transaction, making it perfectly suited for gaming purposes.

The most important thing to remember about NFTs and gaming is that the true value of NFTs is based on their uniqueness, not just in-game scarcity. While many games will still assign rare items an in-game rarity, there are few if any reasons why a developer couldn’t make one player’s sword more powerful than another player’s sword in the same game.

Here are some possible use cases:

  1. A digital asset originally sold in a limited supply can be traded and resold with no restrictions once the original purchaser no longer wishes to keep it. This allows for true ownership of digital assets, which will empower players and developers alike in many significant ways.
  2. Any virtual object is possible – from swords and helmets to cars and houses.
  3. A developer could make unique digital assets with specific events or abilities, allowing for diverse gameplay styles.
  4. NFTs are also good for collectibles – players can collect any number of items with distinguishable properties, which they can show off to other players in-game.

collectibles

What are the benefits of NFTs?

As opposed to fungible tokens, NFTs can’t be spent several times in a single transaction – making them impossible to duplicate. This also makes it easier for projects that use Ethereum’s blockchain to manage their supply easily since they know exactly how many digital assets exist at any given time.

NFTs can’t be stolen, or otherwise inflated – which makes it easier for developers to manage their projects’ supplies while still following relevant government regulations. Since they’re also non-fungible tokens that live on the blockchain, some have compared it to owning a rare, digital asset that can be traded peer-to-peer with little to no risk of fraud.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.