A non-fungible token (NFT) is a special type of encrypted token that represents unique collectibles. A NFT is used in certain applications that require unique digital objects, e.g. B. Encrypted art, digital collectibles and online games.
This is in contrast to cryptocurrencies like Bitcoin and many networks or utility tokens that are fungible. Fungible tokens can be exchanged with one another as they have the same value as a simple exchange between banknotes of the same denomination.
NFTs cannot be copied or shared between different owners. Like a unique work of art, NFTs are valued for their cultural significance and social capital value, as well as their famous works. NFTs are also very popular with artists as part of the resale price is returned directly to the original author.
Tokenization of physical assets
In the blockchain world, NFT means that each token has its own value and distribution properties. Another difference to homogenized tokens is that non-financial transactions are indivisible. The most common token standard for NFT is ERC-721.
Ethereum’s ERC-721 standard can be used to prove that a digital file is a unique “original file” in order to solve the problem of digital file copying and to confirm its authenticity and uniqueness. Non-fungible tokens invariably prove digital ownership.
Access to the actual asset
When you buy an NFT, not only do you get an immutable record of ownership of the asset, but you also get access to the actual asset.
According to industry data company Not fungibleAs of March 30, the NFT market had 5,498,710 transactions for a total of $ 557,623,962.02
Non fungible tokens & DeFi
Non-fungible tokens not only work in the Ethereum blockchain, but can also be executed in other decentralized networks such as EOS and NEO. These decentralized networks all function as smart contracts with a box full of NFT tools so developers can detail metadata.
NFT has increasingly started to integrate into the decentralized financial sector (DeFi).
For example, the DeFi protocol Yearn Finance has developed an insurance product Y.Insure for assets in virtual currencies.
Y.Insure uses the NFT mechanism (ERC-721) to represent the unique attributes of insurance policies.
Other DeFi projects with NFT bearings are MEME, Bancor and Enjin.
Non-fungible tokens can be traded on OpenSea, Nifty Gateway, Nifty Gateway, MakersPlace, Rarible, SuperRare and other platforms.
By 2017, CryptoPunks and CryptoKitty were the two earliest NFTs to be created and growing in popularity. CryptoPunks contains 10,000 cute animations of human bodies and animal characters. CryptoKitty is a series of images of fantasy cats that were originally given away for free. The most valuable CryptoKitty is now worth more than $ 100,000, and CryptoPunks is worth more than $ 1 million.
Another major player driving the NFT boom is NBA Top Shot, a video-based website for virtual basketball trading cards that launched last October.
NBA TopShot offers NBA authorized collections on the theme of basketball and is the previous defending champion in the NFT market.
Source: NBA TopShot via NonFungible
NBA Top Shot was the largest NFT product with a total transaction volume of USD 459.71 million. To date, over 276,350 transactions have been processed in the network.
Image source: Shutterstock