What do you think of NFTs? People have compared it to a new invention, such as the Internet or even fire. But what is an NFT, anyway? And why is everyone talking about it? More importantly, how do you create one?
NFTs
This type of digital asset, known as a non-fungible token (NFT), cannot be replicated. It’s like a Picasso, except it’s protected by cutting-edge technology, making it nearly impossible to duplicate. So let’s understand the difference between a fungible and a non-fungible thing.
What is a fungible asset?
- A fungible asset can be swapped out for another. A bitcoin is fungible, just as our paper bill is. Let’s say one of your coworkers offers to exchange a crumpled $100 for your crisp $100. There is nothing new here. Both of you still have $100 in your pockets. You wire me a bitcoin, and I’ll send you back another one. We each still have one bitcoin.
- Also, it is divisible – what do I mean by divisible? To put it another way, you can get a $100 bill for a bag of 10,000 pennies. With bitcoin it happens too, think of satoshis (smallest unit of bitcoin) as something similar to a penny.
Can you do the same with NFT?
The answer is no, you cannot do that. Not convertible, and cannot be divided into smaller parts either. Think of an NFT as a piece of art. Can you cut Picasso’s painting in half? No. It’s completely worthless. There is no easy way around this. It is one-of-a-kind, and there is no other like it.
Well.. only except if you’re like Banksy, who tried shredding one of his works after being sold at an auction for more than $1 million. 😂
So what are NFTs for?
These non-fungible tokens have the biggest potential to transform a wide range of industries because of their diverse range of applications. Sectors, perhaps? Existing industries could benefit greatly from them, but new ones could also be born as a result. The basic digital object is the token, which can be fungible or non-fungible, but all reflect the real worth of a financial or digital asset.
- You can think of tokens as currency in a particular setting, such as a casino. The chips have little monetary value outside of the casino, yet they are valuable within its walls.
Follow us on Twitter @spielnft for an amazing NFT community! It’s still new but together, we can do great things!
- In the virtual world, the tokens perform the same role. So its value has the characteristics that its creator wants to give it. However, the most common tokens are used to signify investments, provide various services, or partially or completely represent a property.
Where can you use them?
- DIGITAL FASHION: Through the use of digital design, this new era is transforming the fashion industry. The first digital-only dress sold for $9,500 in 2019. Their goal is to eliminate waste and ensure that brands know the measurements and quality of an outfit prior to production.
- REDEFINING LUXURY: Luxurious items can now be tracked thanks to a collaboration between Louis Vuitton, Prada, and Richemont. Pre-owned Rolex watches, for example, are sold with a detailed history of how many owners they have had, how many hands they have been through, and how much they have cost each time they have been sold.
- UNIQUE & EXCLUSIVE PROPERTIES: Using CryptoKicks as an example, we can see how this works. To combat knockoffs, Nike has filed a patent for a design that encourages its customers to come up with their own unique ideas. Assume that you have a concept for a new shoe design. After you cast it, the results are astounding. These will be highly sought after. Nike will then sell shoes with your design, after developing an NFT of it. You could walk away with tens of thousands of dollars, and the whole thing would be documented for posterity. While Nike makes and sells the shoes, you own the design.
As far as I’m concerned, NFTs aren’t a revolution in and of themselves. In other fields, such as video games, they’ve been around for a long time. Even if you didn’t realize it, you were utilizing an NFT every time you upgraded your virtual tennis player’s racket or activated a unique weapon in Call of Duty.
How Do You Create One?
In order to create a token, a smart contract is generated on a blockchain network. One of the key distinctions between tokens and cryptocurrencies is this:
- Cryptocurrencies rely on their own blockchain technology, whilst the former relies on a third party.
- Most developers use Ethereum’s ERC-20 token platform, which is the second-largest in the world, to build tokens like Bitcoin.
Because of this, Ethereum is perhaps the most essential market player in tokenization. And of course, the growth of non-fungible tokens. All the benefits of a token are there, but NFTs add something extra: they are unique and only exist in the world if and only if their creator wants them to. For example, the CryptoKitties!
Tell me this isn’t adorable! It was bought for 600 Ether, which is worth about 1.8 million dollars in cryptocurrency (today’s exchange rate). What could possibly go wrong with owning those creatures? There is no joking around when it comes to the 600 Ether price tag for these items. NFTs may be a spectacle, but their real-world applications are groundbreaking.
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