NFT overview that you need to know
This article will help you understand an overview of NFTs, important, useful and interesting information that you may not know.
Recently, you may have felt the heat of NFT coming to the traditional market when social networking sites or traditional news channels have mentioned NFT transactions worth hundreds of thousands to millions of dollars.
So what is NFT? What are the characteristics of NFTs, and what types of NFTs are there? What are the ways to create and own NFTs? What is NFT used for with such great heat?
All the answers to the above questions will be found in the article below. The article is translated from an article by Messari
What is NFT?
NFT stands for “Non-fungible token”, ie tokens that are not interchangeable. I will explain both sides of this phrase.
The first is “token”. You can understand simply, they have a mechanism to work like files – eg jpg, gif, png,… – to store information and values on the internet. The tokens we talk about are files stored on networks like Ethereum. Because they are files on blockchains, information about token owners or transactions is publicly transparent.
Next, to understand the meaning of the phrase “not interchangeable”, I will first explain the phrase “interchangeable value”.
Assets that are “substitutable” means that they are identical and exchangeable, e.g. one of my $10,000 bills is exactly the same as a $10,000 bill in my brother’s pocket, 1 BTC of mine. I’m exactly the same as your brother’s 1 BTC. Therefore, I can exchange mine with yours, exchange 1 BTC of mine with 1 BTC of brothers without any damage.
So, assets that are “non-substitutable” means that they have a unique meaning, such as red books, diamonds, etc. Each diamond has a different cut number, The level of sophistication, brightness and color varies, and each house has a different size, location, and surrounding facilities. But diamonds or red books are still not NFT because they are not “token”, not “file”.
The most popular NFTs in the crypto market we talk about are electronic works of art.
Read more: NFTs: Artists’ New Art Trends?
Properties of NFT
Because NFTs are a way to store files on blockchains, they possess the basic characteristics of blockchain tokens in general and NFT characteristics in particular:
- Uniqueness: These tokens are unique, even if other people create identical files they will still be different from previously created files.
- Perpetuity: The existence of these tokens is permanent, along with the information in that token such as messages, photos, sounds, or data, …
- Programmable: NFTs are also lines of code on the blockchain, and the author of the NFT can always be verified, regardless of how many owners the work has been.
- No licensing required: This is a feature depending on the type of NFT. If the NFT was created on top of an open blockchain network, the NFT also inherits the network’s property of being arbitrarily accessible.
- Ownership: NFT holders have full discretion to own and use the NFT.
How to create NFT
There are many ways to create NFTs, but all go through the following steps.
First, you determine which files you want to turn into NFT. There are many types of files that can become NFT, such as image files (JPG, PNG,…), audio files (MP3,…),…
Next, you need to create an Ethereum wallet to access the NFT marketplaces, and deposit an amount of Ethereum used to create NFT on the Ethereum network.
Then you need to connect your wallet to NFT marketplaces like Rarible. Once connected, you can already access all the features you need to create, buy, and sell NFTs.
Finally, you upload your file to the platform and fill in the necessary information such as NFT description, number of copies you want to create, etc. and start minting that NFT, with an amount of Ethereum fees to generate. NFT. This fee is to confirm this NFT is part of the Ethereum network.
The uses of NFT
Art products on blockchain can easily verify product owner and author. Issues of copyright, or copyright, will be neatly handled with blockchain technology.
A prime example of NFT in art, is a digital painting that just sold for nearly $70 million – setting the record for the highest price NFT ever sold.
Electronic transaction card
Sorare and NBA Top Shots are two top sports card collector apps. Both cater to e-sports games.
Origin tracking and specification validation
In the ordinary world, art products will take a lot of time, effort and money to verify a work is genuine or not. With blockchain technology, it becomes extremely easy and convenient.
Video games are already pre-coded from the ground up, so it would be super easy to include NFTs in games. There are many projects to use games as development levers for the NFT project, such as Axie Infinity – a Pokemon game simulation project that creates NFT Pokemon and has them fight.
Domain names are also NFT products because they are different, unique, and have long been in the business of domain names.
Music, tweets, memes, and technical content can all become NFTs, making that content unique and meaningful.
Recently, there are many tweets that have been sold at sky-high prices, for example the first tweet of the founder of Twitter sold for $ 2.5 million.
Or what do you think if there are songs of idols that only you can own the copyright? In my opinion, in the future, content development platforms will become the target of many NFT projects.
Tokenization of high-value objects
In February 2020, a bottle of real Fine was sold as NFT to avoid counterfeiting from counterfeiters. This is the first time that a real-world substance has been “tokenized”, as proof of ownership of the bottle by a buyer, and sold on OpenSea – an NFT marketplace that allows trading of NFT ERC-721 tokens.
There are many financial products in the real world that are non-exchangeable and non-substitutable. For example, your mortgage on your home cannot be the same as someone else’s mortgage. Another example is that the real estate sector can “tokenize” plots of land and houses to make trading transparent and clear.
Tickets to the event
In the physical world, event tickets can be forged easily, but in the blockchain world, counterfeiting is impossible. In 2020, the UEFA Champions League sold tickets to the audience with online tickets based on blockchain technology.
Common misunderstandings about NFT
Below, I will give some common misunderstandings about NFTs:
Why buy and own NFT instead of just taking a screenshot of the artwork?
Of course, you can take pictures of the artwork, print it out and stick it on the wall. Just like you, you can download the Mona Lisa painting and stick it on your wall. However, your painting is not the real Mona Lisa and has no value. The original painting was paid hundreds of millions of dollars, but the brother’s picture printed out, anyone can make a copy like that.
How is NFT valued?
Certainly not all NFTs are valid. There are a lot of NFTs that create without value, NFTs with value or not, over time, they will be valued by the market.
Do NFTs that “tokenize” real things still have value if they break?
If real items are damaged, damaged or lost, the NFTs will only be left with verifying that the owner of the NFT is the original owner of the item.
NFT in recent times has had a distinct boom, because of the participation of many famous KOLs, the media of newspapers and the purchasing power of collectors.
Will NFT return to its golden age in 2017? Is the recent $70 million NFT just the beginning of NFT’s move toward more massive transactions?
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