What is NFT? (Crypto art collectibles)
I’m sure, most people know blockchain as being synonymous with digital payment system, hey, don’t be surprise; blockchain has found its way into the arts industry. With the advent of blockchain technology, it’s now possible to map the real world to the digital world. Non-fungible tokens (NFTs), also known as crypto collectibles, has cemented this idea.
Non-fungible tokens are each limited in quantity and are unique, unlike cryptocurrencies, where all tokens are created equally.
What is non-fungible token NFT?
A non-fungible token (NFT) is a blockchain powered cryptocurrency token that is unique and indivisible. One unique feature about NFT is that, two NFT tokens are non-interchangeable, that’s, one NFT cannot be interchanged with another NFT. An entity –one NFT token cannot be broken down into smaller components for any application.
NFTs offer multiple options for creating and trading digital assets — such as artwork and games like CryptoKitties. One thing, you cannot take away from NFTs is that, the assets are scarce and provenance, both in digital and real-world. Non-fungible tokens can be built on Ethereum platform using the ERC-721 token standard and the new improved standard version called ERC-1155.
How do NFTs work?
NFTs are created and issued using the frameworks of ERC-721 and ERC-1155.Please, note that, ERC-721 standard can only issue and trade non-fungible assets on the Ethereum blockchain while ERC-1155 enables a single contract to contain both non-fungible and fungible tokens thereby opening a whole range of possibilities.
The standardization of the issuance of NFTs, brings to the table, a higher degree of interoperability, for the benefits of users. It then means that unique assets can be easily transferred between different applications.
NFTs can be traded in open marketplaces, such as OpenSea where buyers are connected to sellers. The marketplaces like any other marketplace are subject to price changes under the market forces of supply and demand.
Practical use cases for NFTs:
- NFTs are used in creating digital or crypto-collectibles
- They’re used in managing ownership of digital items within blockchain-integrated games.
- NFTs is used to authenticate the digital art, while allowing artists to retain their copyright and Intellectual Property.
- NFTs devise a digital identity system that enables users to control their data from one location.
- NFTs allow fractional ownership of high-value items like the real estate.
The most well-known project for NFTs to- date is “CryptoKitties”; a game developed on Ethereum platform to enable players breed, buy and sell digital cats. Each CryptoKitty does have a combination of different properties such as breed, age and color. As such, each CryptoKitty is unique, and can’t be interchanged with each other. CryptoKitty is also indivisible as explained earlier.
CryptoKitty was launched on November, 28, 2017, and over 150,000 users were registered within two weeks of take-off. A figure slightly above $15 million in transactions was recorded and a single CryptoKitty was sold for $170,000. These facts shows how big the project has become, with a global mainstream attention.
Other popular projects using NFTs and crypto collectibles are Decentraland, Gods Unchained, My Crypto Heroes and many more.
Future of Non-Fungible Tokens
NFT gaming and artwork have experienced tremendously growth as more companies are partnering to execute one project or the other in NFT. For example, in January 2019, Dapper Labs, the parent company of CryptoKitties, partnered with other NFT providers to allow interoperability between game platforms.
A number of key organizations, including game developer Ubisoft and the National Basketball Association (NBA), have teamed up to develop NFT projects.
The potentials of NFTs have expanded significantly beyond artwork and gaming. Projects and businesses are exploring non-fungible tokens (NFTs) to applications like identity, certifications, ticketing, and many more.
Despite NFTs still having challenges in regards to scalability and interoperability, the technology has shown its potentials in providing uniqueness, ownership and scarcity for both real world and digital assets.
With the achievements so far in the areas of blockchain collectibles and gaming, NFT technology has proven to be a large growth sector of the blockchain industry as use cases keep expanding on daily basis both in digital and real-world assets.
Non-Fungible Token (NFT) have opened up blockchain technology to new applications, outside of the traditional financial applications. By showcasing the physical assets into the digital world, NFTs have the potential to be a power house, not just in blockchain sphere but in the larger economy.