NFTs or Non-Fungible Tokens

5 years ago if I said, non-fungible tokens or NFTs are changing the concept of money and value by creating entirely new markets or even new economies that can run globally, assorting the old ways of doing business. You all would have called me insane.

Well, what I said about NFTs is pretty much true but if you do not just understand the concept of NFTs don’t worry this article will take you around the concept of NFTs, what are they? How do they work? and what are the markets of NFTs?

What are NFTs?

The exact meaning of the word non-fungible is something that cannot be replaced or exchanged with anything else. For instance, if you have a dollar it can be replaced with any other dollar but if you have the original Mona Lisa painting you can swap it with another painting but then you will not have the original Mona Lisa painting hence it is non-fungible. At its core, an NFT is a kind of cryptographic token that shows a unique asset whether in the real world or a digital setup. And it works as a sustainable proof of originality and ownership within a blockchain network. 

In simple words, NFT can be referred to as a digital asset that represents real-world commodities like music, fine arts, gaming, and videos. They can be called a limited run digital product which is backed by a unique code to identify their authenticity. These digital products can be downloaded from a google search for free but their owners cannot be claimed by anyone until or unless they have proof of ownership of that digital commodity. Keeping in mind the example given above one may have a copy of the Mona Lisa painting at home but he/she cannot claim the originality of the piece they have. 

Moreover, NFTs are fundamentally non-interchangeable with one another which allows for the foundation of the non-fungible and testable scarcity of digital economies. NFTs have taken over the whole cryptoverse in 2021, however, they have been there since 2014. There are many kinds of NFTs in the crypto world but all of these possess the following qualities:

Unchangeable

Unique

Indefinite

Have intrinsic blockchain-backed value

How do NFTs work?

 NFTs are a part of cryptocurrency’s Ethereum blockchain, also known as silver to bitcoin as it is the second most prized cryptocurrency after bitcoin. NFTs are traded and distributed through online marketplaces. To buy any digital asset that is listed as an NFT one must have some cryptocurrency for this he has to create an account on the marketplace that is linked with a cryptocurrency wallet carrying the coins. The most commonly used blockchain for NFTs is the Ethereum blockchain however, blockchains like Flow and bitcoin cash also support them. The Ethereum blockchain uses the ERC-20 token to create the smart contract on the blockchain. These tokens can be bought with Polygon, Solana, and Polkadot cryptocurrency. 

As it is said that the most popular platform to make NFTs is Ethereum, which is the administer public ledger that documents the transactions of NFTs. The process of making NFTs on the blockchain is termed minting. NFTs have a single owner at a time which means NFTs gives the owner exclusive ownership rights. To become the owner of any art or image in NFT form, one has to do the transaction that is recorded and verified through the blockchain platform that gives the proof of transaction and verifies the ownership. The maker of NFT can also reserve certain information under the code like the special signature at the particular spot on a painting that confirms the originality so if anyone professes to have the original painting the special signature can simply confirm the truth. NFTs can be in a form of collectibles, sports moments, music, fine arts, gaming, fashion, images, etc.

At present the three largest marketplaces for NFTs are:

OpenSea.io: This peer-to-peer manifesto state itself as a vendor of unique digital assets. one has to make an account to browse NFT collections.

Rarible: Just like OpenSea, Raible is a popular marketplace that allows creators to create and sell NFTs.

Foundation: This platform focuses to provide a roof to artists squeezing the medium forward and carrying out new creative ways of doing NFTs business.

The NFT digital space is showing rapid changes. New and interesting NFT projects cropped up every day. From the government of Korea declaring the NFT conference to the ICC (International Cricket Council) inaugurating cricket NFTs, to own a digital twin of a physical asset as an NFT. The future that these NFTs trends promise to show is an interesting one. It will minimize the gap between the owner and the buyer, will give value and safety to digital commodities, and will shake up the world with its innovations.