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What is an NFT?

What is an NFT?
  • What is NFT and how does it work?
  • How to buy and sell NFT?
  • What are the uses of NFT?
  • What are the features, advantages and disadvantages of NFT?
  • What are the best NFTs ever created?

In order to know what NFT is?, it is not bad to look at the definitions provided about tokens. NFT stands for Non-Fungible Token and is actually a type of token. In the previous articles, we stated that tokens are exchangeable (like) and non-exchangeable (non-like).

Exchangeable assets are assets that can be exchanged for similar assets without loss of value. For example, a 50,000 Toman note can be exchanged with other 50,000 Toman notes and all of them have the same value.

But non-exchangeable assets are unique and cannot be exchanged with similar assets. For example, two works of art are never exactly the same and are not interchangeable. Precious stones, hand-woven carpets and paintings are all non-tradable assets.

An NFT token is a token that uses blockchain technology to create a type of digital asset that cannot be replicated. NFTs are unique and each of them has its own properties and characteristics and cannot be exchanged with other NFTs.

How do NFTs work?

NFT tokens are issued as digital certificates for digital assets. These tokens, which are bought and sold online, are mostly coded with the help of cryptocurrencies and usually with the same underlying software as many cryptocurrencies.

NFT is a completely smart contract that is produced using open source software and for greater safety, this contract is used digitally. The most important forms of NFTs are Jpegs, gifs, videos or tweets. All digital assets can be converted into NFTs at the request of their owner.


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History of NFT token in the cryptocurrency market

The activity of the NFT ecosystem first started in 2017 with CryptoPunks and CryptoKitties. Today, NFT has entered various fields and is still developing. Cryptopunks that emerged in early 2017 on Ethereum platform.

Cryptobanks were actually a collection of pixelated characters and they were about 10,000 unique items. They were free in the beginning, but after the acceptance of the users, their role in the project changed completely. The increase in public interest and attention gave NFT more stability and allowed it to continue today.

 

Applications of NFT

Before the advent of non-fungible tokens, even though copyright law existed, it was almost easy to illegally copy digital artwork. The development of NFTs has many applications in crypto-artwork, digital collectibles, real estate, finance and logistics, and many other fields.

In this way, by using irreplaceable tokens, it is possible to prove the validity and authenticity of many unique and collectible goods. In the following, we discuss some of the applications of NFT:

 

Application of NFT in art

Non-equivalent tokens have helped to solve the age-old problem of scarcity of digital works. Crypto art owes much of its value to the digital determination of its validity and ownership. Although everyone can view and review CryptoPunk characters, which are based on the Ethereum blockchain, and save images, they cannot claim ownership.

Application of NFT in computer games

The gaming space has a huge demand for unique items that can be traded. The rarity of these items has a direct effect on their price. Gamers are also familiar with the idea of ​​valuable digital items. Microtransactions and in-game purchases have created a multi-billion dollar gaming industry that can benefit from blockchain technology and NFTs.

Video game tokens offer a combination of art, collectibles, and various uses for gamers. However, there is still a long way to go regarding the implementation and use of non-game tokens in large computer games.

 

Application of NFT in music

Like photo or video, you can also attach audio file to NFT to create a collection of music tracks. One of the biggest problems for musicians is getting a fair share of the sales of their music. But there are at least two methods to achieve a balanced and appropriate result:

Platforms for playing music on the blockchain platform and monitoring and tracking sales rights on the blockchain platform. It is difficult for small blockchain projects to compete with big and well-known music companies for music streaming services. Meanwhile, smaller projects decide to work mostly with independent artists.

Combining music with NFTs is a great idea to use the realm of non-fungible tokens, but without the support of well-known music companies, it may face various problems.

 

  Also read this article: Free stock market training from zero to one hundred

 

Is NFT the same as digital currency?

Cryptocurrencies are actually tradable tokens, but NFTs, as we mentioned above, are non-tradable tokens. Although the manufacturing technology of these two types of tokens is the same, the coded infrastructure of NFT is similar to digital currencies. But there are differences between them, which are:

Exchangeable tokens can be divided into smaller units, but non-exchangeable tokens cannot, and each of them is considered the smallest unit. All exchangeable tokens have the same characteristics. But non-exchangeable tokens are unique and each of them has its own characteristics and properties.

NFTs are stored and transferred in the same way as digital currencies, except that each unit of NFT tokens has its own unique characteristics and is not equivalent to another unit. The main thing that makes an NFT different from other digital assets is that its ownership is recorded on the blockchain (an immutable database) and no one can violate this ownership.

Also, like digital currencies (like tokens), NFTs are stored on the owner’s wallet and can be transferred with a simple transaction within seconds. In other words, with the help of NFTs, there is no need to go through time-consuming processes to sell a digital asset.

How to buy and sell NFT tokens

The first thing you need to do to make and sell NFTs is to choose a selling platform and a payment platform. There are many online platforms where you can create and sell NFTs. Popular NFT auction platforms include: OpenSea, Rarible, SuperRare, Nifty Gateway, Foundation, VIV3, BakerySwap, Axie Marketplace and NFT ShowRoom.

NFT payment platforms are also plentiful and you can use popular options like Coinbase, MetaMask, Torus, Portis, WalletConnect, MyEtherWallet and Fortmatic. You can use any of the platforms mentioned above and many more. The general process is the same in all cases, but we suggest that you always carefully check the fees charged to you. The work process includes these steps:

  1. Buy some cryptocurrency
  2. Connect your wallet to the NFT platform
  3. Upload your file
  4. Launch your auction
  5. Describe your product
  6. Pay the fees

 

Are NFTs legal?

An NFT token is an asset with a digital signature from its creator that authenticates with the help of a password on any server, browser or operating system and verifies it in a decentralized way. Therefore, in this space no organization is responsible for hosting NFT.

For example, if an NFT is created for a concert ticket, that ticket does not need to be verified through ticketing platforms, as it can simply be verified on the blockchain network.

Features and benefits of NFT tokens

Rarity:  One of the reasons for the value of NFT tokens is the rarity of these tokens. NFT token developers can easily produce as many tokens as they want, but to maintain the value of the NFT token, its production is limited.

Indivisible:  Most NFT tokens are not divisible and cannot be divided into smaller units. You either have to buy an entire digital work or skip buying it altogether.

Uniqueness:  Uniqueness is one of the most important features of NFT tokens. NFT tokens have a tab and this is a sign of data stability and uniqueness and their authenticity certificate.

Tradable and transferable:  Although NFT tokens are bought and sold in certain markets, their trading is very quick and easy. NFT tokens are easily transferred and traded on digital wallets on mobile and PC, on exchanges. With NFT token you can convert or buy a game item, ticket or any other digital asset into cash.

Authentic and unfalsifiable:  NFT tokens are designed based on the blockchain and have authenticity. Tokens are made based on blockchain technology, the percentage of fakes is almost zero. This means that the NFT token is largely safe from the risk of theft and fraud. Despite this feature, you can buy or sell the license of the digital product you want.

Disadvantages and problems of NFT tokens

Since NFT tokens are more secure, their development is much slower than tradable tokens. Accordingly, developing software for NFT tokens is more expensive and complicated. Networks like NFT, which are decentralized, are still not very popular with all users.

 

  Also read this article: Basic analysis training from zero to hundred

 

Why are NFTs valuable?

By using NFT tokens, gamers and collectors can be the immutable owners of in-game items and other unique assets and earn money from them. In some cases, players can build structures such as parks in the virtual world and earn money from them, such as in Sandbox and Decentraland games. Also, players can sell individual digital items they earn while playing on secondary markets, such as costumes (clothes in-game), avatars and in-game currencies.

Artists can sell their digital works directly to audiences around the world without the need for auctions, and in this way keep a larger share of the profits from sales. Also, copyright can be programmed into the digital art, and every time the artwork is sold to a new customer, the creator of the artwork receives a percentage of the sales profit.

 

The most expensive NFTs

In theory, anyone can generate and sell their own NFT token. In the following, we introduce a number of NFT-based projects that have sold several million dollars:

For example, on February 19, a cartoon gif of Nyan Cat sold for more than $500,000. In fact, Nian Kat is the name of an animation that was released in 2011 and now its image has gone viral on the Internet. The image of this gif, which was sold in February at this price, shows a moving cat that leaves a rainbow trail as it moves.

Musician Grimes, who is also the current wife of Elon Musk, has auctioned off several pieces of digital artwork, raising a total of $6 million. The new owners of these pieces of music have allowed them to be made available online.

NFT tokens are not exclusive to works of art and can include other subjects as well. Not long ago, Twitter CEO Jack Dorsey announced that he plans to sell his first tweet as a non-tradable token.

Some people believe that having this token can be kept more as a souvenir. This token was closed with a base price of 2.5 million dollars and finally an Iranian bought the first tweet in history. In fact, Sina Stowe, the CEO of the blockchain company BridgeOracle, bought the token from Jack Dorsey for $2.9 million.

In addition to these, the Beeple painting token was recently sold at a Christie’s auction for a whopping $69 million. This work, called “Everyday: The First 5,000 Days” and created by Beeple, contains 5,000 digital images that Beeple has created over the past 13 years.

 

Top NFT projects

These days, the NFT space is growing at a very fast pace, and the projects based on its tokens are increasing and spreading. These projects include numerous products from gaming to other diverse digital markets. Some of the top NFT projects are as follows:

 

Art markets

In this market, you can buy and sell the NFT tokens you want, and create your own tokens. By benefiting from this platform, buyers can own a part or a layer of the artwork, and the creators of the works can easily apply the desired changes to their produced goods.

 

Cryptocytes

CryptoKitties is a game in virtual space that works on the basis of blockchain. In this game, users will be able to buy, breed, sell and create a valuable collection of various cats. This project has more than 1.5 million users and more than 40 million dollars have been transacted. Some kitties, or cats, have luxury prices, for example, 300,000 dollars. Of course, the average price of these virtual animals is $65.76.

 

The best NFTs ever created

Theta token, Chiliz, Decentraland and several other titles are among the most famous NFT tokens, which we will describe some of them below:

Decentralized digital currency

Decentraland, which is based on the Ethereum blockchain, uses the main token MANA and a second token called LAND. Each LAND token corresponds to a piece of land in the game, and with the MANA token, you can buy various game items.

Dicentraland platform has provided the possibility of earning money and experience through content and application. Those who enter and participate in this project will be able to buy and sell land virtually. Residents in this game have a special digital passport for authentication.

 

Theta digital currency

Project Theta is one of the best and most popular non-tradable NFT tokens. Theta project is a network that focuses more on video content and has provided a specific space for sharing videos. This space is active in a decentralized manner. Those who use the Theta network and project can share their bandwidth and computing power on a peer-to-peer basis.

 

Chiles digital currency

Among non-fungible NFT tokens, Chiles is one of the most important developing tokens. Chillies is a blockchain-based and Ethereum-based platform that has recently invested $50 million to expand its project.

Chili’s token platform allows sports institutions to earn money through fans on the blockchain platform and using technology. CHZ is Chiliz’s proprietary token, and considering the progress and profitability of this token in the past year, it seems to be one of the best choices for investing in 2021.

 

NFT based games

As we mentioned in the previous sections, the gaming space has a huge demand for unique tradable items. Although there is still a long way to go regarding the implementation and use of asynchronous tokens in large computer games, in the meantime, large projects are trying to create and use blockchain technology in their games. Axie Infinity and Battle Pets are similar to Pokemon games with tradeable items and pets. Also, you can buy and sell your desired tokens from other markets.

NFT tokens in blockchain games may have a decorative role; But many of them also have different uses. Each of the pets in Axie Infinity has a set of fighting abilities. These capabilities also affect the value of the animal in question. A cryptocurrency can be extremely valuable simply because of its reproducibility. Determining the value of any pet depends on a set of its appearance and functional characteristics.

Conclusion

NFT is a token that uses blockchain technology to create a type of digital asset that cannot be replicated. NFTs are unique and each of them has its own properties and characteristics. Today, NFT tokens are used in various fields such as real estate, artwork, music, computer games and many other fields.

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