24
0

What is the hype behind NFTs

24
0

NFTs are a major component of the cryptocurrency ecosystem. They have recently gained massive hype and widespread acceptance across various brands as well as users. This article delves deep into NFTs

NFTs

An NFT is a non-fungible token that falls under the range of a “cryptocurrency token”. An NFT is unique and it can’t be copied therefore it is termed non fungible. It can’t be interchanged with any other NFT on the entire ecosystem and therefore it is unique. There is a range of options associated with NFT such as original artworks.

What is the difference between a nonfungible token and a fungible token?

A fungible asset is any specific asset that can be interchanged with any other asset on that blockchain. These assets can be easily broken down into components or smaller units which eventually possess similar qualities. Such an asset is “indistinguishable” in nature. These hordes of traits make a fungible asset the perfect payment mechanism to facilitate any specific trade.

A basic example of a fungible token is BTC which is directly identical to any specific BTC in circulation.

On the other hand, NFTs are powered with the help of smart contracts. An NFT contract contains specific information which is unique to the token and can’t be copied by another token. Due to such a function NFT cannot be interchanged with another NFT because the information logged in both of them is specific to that NFT itself. Due to such traits, NFTs cannot be interchanged with other NFTs as well as they can’t be broken down into smaller components.

What is the use of an NFT

Although the technology behind an NFT sounds promising, users are intrigued by its application purposes. An NFT is a scarce asset because it contains a specific computerized code that is unique to a particular NFT and cannot be copied. This characteristic serves as a defining mechanism behind the application of an NFT.

NFT helps in crafting unique digital goods which can be used to classify a rare physical asset class. The physical asset class can be tracked down as well as verified cryptographically with the help of the blockchain protocol behind an NFT. Various digital art, collectibles as well as game pieces, etc. can be traded as NTFs. The possibilities for such trades are endless and have no underlying limits within them.

How are NFTs crafted

An NFT is crafted with the help of the Ethereum blockchain. The Ethereum blockchain facilitates NFT building with the help of an ERC 721 token standard. The token standard outlines a
minimum set of features that are supposed to be compulsorily followed in case an NFT is crafted, however on the other hand the token standard does not limit the extra attributes that can be added to the NFT.

Where are NFTs traded

Various platforms like Open Sea, Super Rare as well as Nifty Gateway facilitate the NFT trade and bring NFTs to an ever-expanding consumer base.

Use cases of NFT

One of the most famous applications of NFT was the Ethereum-based game ie. “CryptoKitties”. This game allowed various players to buy, sell as well as breed various cats in a digital form. The platform was launched on November 28, 2017 however the game gained massive acceptance within two weeks. In two weeks, it had nearly 150,000 users plus $15 million in various transactions across the platform. The platform gained massive traction when a single Cryptokitty was sold for $170,000.

What is the future of NFT

The NFT gaming sector is growing at a massive pace with various organizations trying to build various platforms across NFT gaming. Old platforms are trying to scale as well as include various new features across existing NFT-based games.

Apart from this various organizations are utilizing the potential of NFTs to gain insights into how NFTs can be used to grant ownership of various religious real unique projects in a digital form.

Although NFTs can be considered to be operating across a nascent stage because NFTs have been facing massive challenges regarding scalability as well as interoperability. However, the utility of NFTs has proven that it will develop itself into a major technology in the upcoming years.

Disclaimer: The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product. It is only intended to provide education about the financial industry. Please do your own research.