Many experts believe non-fungible tokens (NFT) to be the true future of the blockchain economy, but what are NFT? What can be their benefits and use-cases? How are NFT different from Fungible Tokens such as Bitcoin, Ether, DDKoin, etc? There are answers to all these questions but first we have to understand the difference between the Fungible tokens and NFTs.
What are Fungible Tokens?
In economics, fungibility is defined as the equivalence of each unit of a commodity compared with the other units of the same commodity. For example, one kilogram of rice, one barrel of crude oil and one unit of currency like EUR, USD or Yuan, will always be the same. They are determined by the quantity and not quality. If someone lends you ten EUR, you don’t have to return the exact same 10 EUR bill later on. Any 10 EUR bill will do. Fungible tokens have currency-like properties and Bitcoin, Ether, ZCash, and any ERC20 tokens are examples of them.
What are Non Fungible Tokens (NFT)?
Non-fungible tokens (NFT) are distinctive in nature and represent unique assets. They are non-interchangeable, unique and non-divisible. You cannot replace an NFT with another token of the same type. If you lend an NFT to someone, you expect them to return the very same token. They are defined by their unique information or attributes and this makes them unique and irreplaceable with another NFT of the same class/category. Also, NFT cannot be divided into parts.
Difference Between Fungible Tokens and NFT
The following table highlights some differences between Fungible Tokens and NFTs:
What are the uses of NFTs?
As for the uses of NFTs, they are immense. Remember CryptoKitties? They happen to be one of the first use cases of non-fungible tokens and have been very successful in the blockchain community. CryptoKitties represent collectables (Digital assets) that are unique and since they can be stored in your Ethereum wallet, you can easily buy and sell your CryptoKitty NFTs for different amounts of fungible tokens such as Ether. The value obviously depends on the rarity of your NFT.
NFTs are particularly good with virtual applications that need unique digital items such as gaming and collectables. NFTs can also be used to represent digital property, like virtual houses, land spaces and artworks. They can act as the keystone of a blockchain-powered digital economy and work seamlessly alongside their fungible like counterparts and open new ways to the digitization of assets. Utilizing this method one can create exciting new markets for digital goods in a virtual reality universe.
This is precisely what people can expect from the COSMOS CR platform. Virtual assets such as land parcels, planets and collectibles will be stored as NFT on the blockchain. Also the NFT will support the virtual world by storing special information about the land content that can be used by the data sharing solution. There will be a marketplace from where people will be able to buy virtual real estate, VR developments and VR applications. The buying will be done through fungible tokens that serve as their virtual world currency ($CYBR Tokens). Once you are in possession of a land parcel you are in full control of your land, and there are no limits to what you can build there. Same goes for the experiences you can build and enjoy here and the best part is, you get to do all this in a 360-degree, virtual world. If you want to know more about it, visit our website here.
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