What are NFTs? Non-Fungible Tokens Explained
NFT stands for ‘non-fungible token’, and this article will give you a full scope on how they are used as in-game assets, digital art, and collectibles.
NFT stands for ‘non-fungible token’, which are unique, irreplaceable assets that live on the blockchain. In-game assets, digital art, and collectible-related projects are the most prominent NFT use cases today.
In contrast, fungible assets have units that are interchangeable with one another, such as Bitcoin or the dollar bill.
In the past year, NFTs have exploded onto the global investment scene, with digital items regularly selling for millions of dollars at auction.
A digital artwork by the artist Beeple sold for a record USD 69.3 million at Christie’s. Sotheby’s, one of the world’s oldest auction houses, recently opened a splendid new gallery. The most notable thing about the building is that it occupies prime real estate in an online ‘metaverse’, and auctions NFTs. CryptoPunk 7523, one of a randomly generated set of 10,000 unique digital characters, sold for USD 11.8 million at Sotheby’s Natively Digital auction.
When discussing NFTs, it isn’t the piece of art that is revolutionary, but the technology behind it. NFTs are a method of granting people unique ownership of digital assets by registering them on a blockchain. That may not sound as cool as a video clip of basketball star LeBron James in action that sells for USD 100,000, yet it’s a game-changing solution with significant implications for the future of human interaction, enabling an unambiguous framework for value in virtual exchange.
- NFTs are digitally unique: By registering digital assets on a blockchain, unique ownership is granted as every NFT has its own identifier
- NFTs have publicly verifiable and traceable ownership: The token in your wallet proves that your copy of the digital file is the original, while your private key is proof-of-ownership of the original NFT
- NFTs are scarce: The creator of an NFT can decide how many replicas are minted
Currently, content creators often don’t get paid what they deserve, as ownership of their work is often shared by third-party platforms and royalties are hard to track.
NFTs can power a new creator economy, where creators don’t hand ownership of their content over to the platforms they use to publicise it, as ownership is already baked into the content itself. Additionally, royalties payouts are completely automatic with NFTs if royalties are already programmed into their content.
NFTs enable us to build our digital identity securely in the metaverse and traverse across different ecosystems. While passwords can be stolen and biometrics can be hacked, identity secured on the blockchain is more difficult to fake and steal. By establishing and securing each individual’s digital identity, we can experience an ‘open-loop’ virtual environment, such as a gaming or social platform.
An example of NFT gaming is Axie Infinity, where players can own, buy, sell, and trade resources through a play-to-earn system and a secondary marketplace. These resources could then be used in the game to complete quests and defeat bosses.
- Owning gaming assets: Some NFTs are tradable items in the world of gaming, where the items are fully owned by the gamer and can be sold or traded. This is another big step into the world of decentralisation that blockchain technology is facilitating.
- New ways of scaling NFTs: TikTok, the social media video clip platform that has surpassed Instagram in popularity, partnered with Immutable X to immortalise its most popular moments as NFTs. A company as large as TikTok using layer-2 technology—the second layer of a blockchain that serves to bypass some of its existing bottlenecks—may give a glimpse into how NFTs might evolve.
- Improved security with better storage options: Storage is one of the hottest topics when it comes to crypto and NFTs. While an NFT transaction is completed on a blockchain, it’s usually stored off-chain, on the project’s or another third party server.
Some NFT collections, such as Bored Ape Yacht Club (BAYC), also provide real world benefits. With owners including Eminem, Jimmy Fallon, Steph Curry, and Snoop Dogg, BAYC is building a community around their collection through meetups and parties for owners.
Crypto.com NFT features curated NFTs from the worlds of art, music, and sports, such as Formula 1, the UFC, and Paris Saint-Germain. Users can discover collections by these creators, trade NFTs with other users in the Marketplace, and share their creativity with the world by minting their own collectibles.
Crypto.com NFT Marketplace
Users can now mint and sell NFTs in the Marketplace through a simple creator application process. Just head to Crypto.com/NFT and click ‘Create’ on the navigation bar to be directed to the application page. Make sure to tell us about your journey as a creator and give concrete examples of your past experience, as well as the types of NFTs you wish to create on our platform.
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