If you are interested in the cryptocurrency market, you cannot ignore the term Non-Fungible Token (NFT). The market for NFTs is exploding. Non-fungible tokens have become popular when investors scramble to spend enormous sums of money on items that only exist online. So, what exactly is it?
What is NFT?
A non-fungible token is the digital illustration of unique assets with a certificate of authenticity managed by blockchain technology.
All NFTs have a unique quality that cannot be replicated. It can be used to represent a distinct value from any other similar token. Essentially, NFTs are the tokenized version of real or digital assets.
Characteristics of NFTs
- Authenticity: NFTs provide proof of authenticity and eliminate issues of counterfeiting and fraud. There is only one of each NFT in existence so it cannot be duplicated, copied or replicated.
- Indivisible: NFTs contain identifying information recorded in their smart contracts so each token is unique, one NFT cannot be interchanged with another NFT, and NFTs cannot be divided into smaller units. So, you can’t buy a fraction of a specific NFT.
- Specific ownership: Ownership is one of the defining key components of any NFT. NFTs are bound to one smart contract on one platform where no purchaser can change the data later. So NFTs can only be transacted and transferred by the owners, this means that even the issuer of the NFT cannot replicate or transfer the NFT without its owner’s permission.
Benefits of NFTs
- Easily transferable: NFTs are bought and sold on special marketplaces, the use of NFTs depends on their originality.
- Trustworthy: Each NFT contains distinguishing information that makes it easily verifiable so it’s hard to create counterfeits with a decentralized and permanent record.
- Indestructible: NFTs cannot be destroyed because they exist on the blockchain thanks to smart contracts.
NFTs are creating opportunities for unlocking new revenue streams. In the past few years, the usage of NFTs has grown, and it is now used in several industries across different sectors such as virtual collectibles, visual arts, game designers, digital artwork, real estate and more. So, how is it used?
- Virtual collectibles: Collectibles are currently one of the most popular applications of NFTs. Non-fungible tokens brought a new character to the collectible world. People have been paying hundreds of thousands of dollars for these NFTs. CryptoKitties is one of the most notorious examples of collectibles and sales for the virtual digital market.
- Gaming Industry: NFTs are popular in the gaming industry, it allows in-game items to be tokenized and easily transferred or exchanged with peer-to-peer trading and marketplaces, so can help drive in-game economies. For games, these tokens can be used to represent in-game items and it can solve some of their internal difficulties.
- Digital Art: Digital art platforms have emerged. It allows people to engage with art from their homes, on their computers or phones. Some artists deployed their own smart contracts, creating real brands for themselves.
The positive side of NFT’s is that they are unique, rare, durable and extensible. There are also some shortcomings such as their limited tradeability. Unlike Bitcoin or other fungible cryptocurrencies, they cannot be used outside of a certain ecosystem. NFTs are bought and sold on open marketplaces that connect buyers and sellers, such as OpenSea or Decentraland’s LAND marketplace.
The ultimate value of an NFT can change over time, so it is becoming more and more valuable. And now, we are developing several HTML5 games with NFT applied. We hope that it will be completed soon. Please follow the latest news from us to get all the information.