NFTs are getting more and popular in the following months, but what are they exactly? NFT stands for non-fungible tokens, a art, video, picture or 3D file embeamed into blockchain. It can be valued as art alone or it can give some additional benefits to the owner called utilities. They can be access to special clubs, events or even getting passive income from tokens tied with smart contract to the collection from which you own the art.
The NFT is unique, meaning it has its own identity on the blockchain. This means that if you buy an NFT, you will be able to prove when and where you bought it.
The Ethereum blockchain is specifically designed to support NFTs. In fact, it was created by Vitalik Buterin in 2014 after he saw the potential of using blockchain technology to create digital scarcity. Other cryptocurrencies like Cardano and Solana also support the NFTs.
The most common use case of NFTs is creating digital assets on blockchain. Think of it as a digital asset registry that can be used to store data about any asset with multiple characteristics, such as its owner (if it has one), location, history and so on.
What makes them so special?
NFTs have several features that make them more than just digital assets: They can represent any kind of real-world asset from cars to houses to artwork; They can be stored on the blockchain forever; They can be used as collateral for loans; They can be sold directly on the blockchain without middlemen like banks or lawyers; No matter how many times you divide them or share them with others, each piece will always remain unique and have its own value.
So what are NFTs exactly?
The first step to understand NFTs is to understand that there are different kinds of tokens on the blockchain. Tokens can be fungible (like Bitcoin) or non-fungible (like ERC-721).
Fungible tokens are all identical while non-fungible tokens have different characteristics and no two items are the same. This makes them perfect for representing any kind of digital asset because each one is unique.
The advantage of using NFTs is that they can be used as digital collectibles or assets that have value beyond their utility as a currency. They can also be used as proof of ownership and store information about an item’s history such as provenance or ownership history.
For example: say you want to buy a house with cryptocurrency. You could create a smart contract that represents the house and transfer ownership when you pay the seller in cryptocurrency. This would be considered an ERC-721 token and will be unique to each house because each house has its own unique set of characteristics that make it up: the color of the roof, the location, whether there's a fireplace or not...
Now when you learned about what are NFTs it is obvious they are here to stay, if you want to learn more about them the best way is to join some well-known project discord channel and learn about the community and values that are behind it!
You can find some I worked with here or some upcoming ones here
