We get it that for some people cryptocurrencies are confusing enough. Anyway, today we are taking a step further, and we’ll have a look at NFTs - another blockchain native asset class.
NFTs or Non-Fungible Tokens
The keyword we are searching for is in the name - Non-Fungible means that the item could not be replaced. So, NFT is an entirely unique digital token. Similar to the cryptocurrencies, those digital tokens use distributed blockchain networks and consensus mechanisms.
What makes NFTs different though is that when it comes to cryptocurrencies, each coin is the same (for example, if you own 3 Ethereum, they are all the same). On the other hand, each Non-Fungible Token is unique and can be purchased or sold as a digital file.
Well, to be more accurate, it is not exactly the file that is stored on the blockchain. There is a link to the file, as well as a token, that acts as a proof of ownership of the NFT. Also, it is possible for two or more NFTs to exist on the same file. You can also find Non-Fungible Tokens with editions, with only a few copies, or with thousands of copies. Of course, anyone can take your file, and make his own token out of it. Technically, an NFT can be any digital file - image, video, music, etc.
What can we use them for?
We can look at NFTs as we look at a work of art - it does not need to have a special use case to be worth millions of dollars.
As any other unique piece of art, Non-Fungible Tokens have no actual purpose. At the same time, they can give you a sense of pride and real worth to own 1 of 10 (for example) tokens. The same as if you were the owner of an original painting of a famous artist.
Speaking of digital assets, as images, it is hard to believe that it can be unique and not be copied. Well, there is one important difference between NFTs and simple jpeg images. NFT art has certified scarcity. While an image found online can be easily duplicated, the blockchain metadata for the NFTs to which they are attached could not be copied. So, if you use Ethereum’s public blockchain, you can verify that you own the token.
Selling and buying Non-Fungible Tokens
As we already said, what makes NFTs so valuable is their uniqueness. If we think about it, people are ready to give a huge deal of money for some unbelievable things, just because they have no replica. Same with NFT’s.
The first to take advantage of this new age art are celebrities as artists, athletes, etc. Messi, for example, created his own NFT. Many other huge companies and organizations also decided to create some kind of unique digital token.
We can easily say that NFTs are opening brand-new opportunities for the artistic world.
Interesting NFT projects
To be more specific on what exactly NFTs are, here are some good examples:
Ether Rock
Ether Rock is a brand of crypto collectible, which is actually one of the oldest NFTs. It is a jpeg image of a cartoon rock, and last year was sold for 400 ether ($1.3 million). Its value comes from the fact that there are only 100 rocks in the game. And according to its creators, “These virtual rocks serve NO PURPOSE beyond being able to be bought and sold, and giving you a strong sense of pride in being an owner of 1 of the only 100 rocks in the game”.
Proof of Beauty
The idea behind this project is to document the history of the Ethereum blockchain. What it does is, allows users to convert their blockchain transactions into an NFT work of art.
Top Shot
Another interesting NFT project is NBA’s Top Shot. It is a blockchain-based app that supports the trading of collectible items. It is built with Flow blockchain, and the NFT’s contain game moments, video plays, statistics, trading history, etc.
Although NFT’s don’t have real value in the real world there are some specific tokens that can become priceless. If we go back in time, we can see that a lot of people didn’t believe in cryptocurrencies either, yet here we are.
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