NFT: understand everything about the trend of the future and how they work
NFT, along with bitcoin and the metaverse are three of the most talked-about subjects in recent years within the digital universe. However, they are no longer just concepts of the modern world, and are even active in digital trading around the world.
According to studies by the website DappRadar, in 2021 alone, NFTs will move around $25 billion worldwide.
In turn, buying bitcoin has become so common that cryptocurrency trading has grown 180% in the last year alone. And Metaverse is expected to reach 1 out of every 4 people in the world in just 4 years.
What is NFT anyway, how are these 3 elements related, and why do you need to know about it now?
This is the right time get more about NFTs
After all, what is NFT?
NFT stands for “Non-fungible Token“. In free translation, we can say that it is a “Non-fungible Token”.
To explain this concept, it is first necessary to understand that a token is an electronic symbol with unique characteristics. In turn, a non-fungible token determines that which does not allow replacement or exchange, due to its unique characteristics.
Therefore, one can understand an NFT as any item that allows exchange or negotiation and can have changes in its value according to its exit position.
For example, a work of art, which even if it has an identical reproduction, cannot match the value of any replica to the original good.
But if in the real world it is easy to measure issues such as exclusivity, how to measure this proposition in the virtual environment? That’s where NFTs come in.
In short, NFT is a kind of digital signature that allows a medium to become a non-fungible item. In other words, it certifies who owns the original copy of a file, which can be a photo, video, audio, or even a GIF or meme.
In practice, the use of NFT seeks to create a digital asset with the same authenticity as items that arouse the interest of art collectors. For example, unique paintings, sculptures, or decorative objects.
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How a Non Fungible Token Works
In order to possess the characteristics we mentioned above, an NFT needs to prove its value as a unique and irreplaceable item among different types of digital assets.
Then, for this to happen, there is the validation of a token that digitally certifies the ownership and guarantees who is the original owner of the NFT.
These certificates prevent copying and are stored in decentralized networks based on a smart contract, which guarantees the security and inviolability of the file.
Since it is not possible for one NFT to be equivalent to another, they become unique and irreplaceable items, and can even be combined with other tokens to generate a new unique item.
Finally, NFTs contain information that identifies the owner, assigns data to the asset, and allows it to be transferred among people who own the token related to it.
What technology is involved in NFT?
NFT uses the same technology as bitcoins, called the Blockchain. In short, it groups together various pieces of information that are connected together in an encrypted way.
In other words, the blockchain creates secure codes that only allow access to those who own the token for that digital asset.
From this, fraud is impossible and each NFT becomes traceable from its creation. In addition, the technology in question allows data to be shared without the need for third-party permission, as happens on private networks.
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Understand the changes that NFT has brought to trading
The subjective value of scarcity — a primary factor in economics for defining the conditions and prices of any negotiation — also applies when it comes to NFT. In other words, the smaller the existence of a good, the greater its fungibility may be.
To better understand this issue, let’s imagine the example of a formula 1 car. If someone wants to buy one, he will have to fork out about 20 million dollars. Even if it varies, there is a price determined by the product itself.
Now imagine that this car was driven by Ayrton Senna or Michael Schumacher. In this case there is no chance of either of them returning to the track, so there is a subjective value to the item that makes it irreplaceable, just like an NFT.
But if in the physical world, there are ways to guarantee the authenticity of a good through certificates, the transposition of this to the virtual world is happening from NFT trading around the planet.
Would you like to create your own NFT Project? Contact Enkronos team today.
