What is NFT and what are its benefits?
Being a social-media user and tech-savvy, we share many infographics, art pieces, jokes, and other digital assets with our family and friends either for entertainment purposes, to make the public aware of your creativity, or to gain information.
But have you ever thought about who is the creator of those assets or what is the origin of that digital property? The answer to these questions is NFT (Non-Fungible Token).
The first-ever NFT named Crypto Punks was released in 2017 on the Ethereum Blockchain. In the same year, another project called Crypto Kitties was launched to generate an investment of $12.5 million.
Let’s understand what is NFT.
What is NFT?
Fungible items denote an asset or an item that can be traded or exchanged with a similar kind of asset. In contrast, non-fungible assets are unique and their ownership can be tracked on the blockchain platform.
Non-Fungible Tokens are digital assets or digital certificates for owning goods or assets representing a wide variety of tangible and intangible items, such as paintings, postcards, videos, virtual real estate, and more. NFTs cannot be equated or duplicated with an asset that is common because every NFT asset is unique.
Owning a digital collectible provides benefits over a physical collectible. Each NFT comprises distinguishable information that makes it different from other NFTs and makes the authenticity of a collectible easier.
History of NFTs
Colored coins are considered to be the first NFTs to exist. They are depictions of real-world assets on the blockchain. It is said that colored coins laid the groundwork for NFTs. After these coins, the trading of Rare Pepes on Ethereum emerged as the NFT project and after this, the first-ever NFT named Crypto Punks was released.
After some time, Rare Bits emerged as the marketplace for NFTs and earned $6 million in investment.
NFT’s are being used across multiple industries because of numerous reasons. Firstly, the complete data of NFT is securely saved on the blockchain, which means tokens can never be removed, replicated, or destroyed. They are indivisible as they cannot be divided into smaller denominations. Using blockchain capabilities, NFTs can be easily traced back to their actual owner and removes the need for third-party verification.
What are some of the unique characteristics of Non Fungible Tokens?
1. Non-Interoperable
As most of the NFTs follow the ERC-721 standard, they are considered non-interoperable, which means the information stored in them cannot be used or exchanged in any way.
2. Indestructible
NFTs are stored and managed via blockchain that leads to a greater level of security. It means they can never be removed or destroyed at any cost.
3. Rare
Currently, the total number of NFTs is scarce globally, making them rare and improving their value. The lesser the number of NFTs, the higher their price will be.
4. Unique
NFTs use blockchain to determine the authenticity of state-of-the-art. It enables you to distinguish original objects from their duplicated copies.
Though NFTs are still in the early stage of development, many people are investing in NFTs to gain prominence. If you are also planning to build an NFT or an NFT marketplace solution, you should get in touch with an NFT development company to help you launch it successfully.
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