What are NFTs and how do they work?
What are NFTs, or non-fungible tokens, which are unique assets that give players, artists, and collectors full ownership of their digital objects.
Non-fungible tokens – NFTs
What are NFTs These tokens are digital assets, and by assets we mean that they represent a wide range of unique tangible and intangible items
From non-fungible sports cards to virtual real estate and even digital sneakers.
One of the main benefits of owning a redeemable digital item is your ability to physically collect for example, a pokemon card or a rare coin.
As each NFT contains unique information that makes it distinct and different from any other NFT and can be easily verified.
It is therefore unique, and also renders the creation and circulation of fake collectibles useless because every item can be traced back to the original source.
Unlike regular cryptocurrencies, NFTs cannot be directly exchanged with each other, and this is because
That no two NFTs are alike – even those on the same platform, game, or group.
To make the idea easier, think of these tokens as festival tickets. Each ticket contains specific information including the name of the buyer, the date of the event, and the venue.
This data makes it impossible to trade festival tickets with each other.
The vast majority of NFT tokens are generated using one of the Ethereum token standards ERC-721 and ERC-1155, schemes created by Ethereum that enable developers to easily publish NFT tokens and ensure their compatibility with the broader ecosystem.
Including exchanges and wallet services such as MetaMask and MyEtherWallet
Eos, Neo, and Tron have also released their own redeemable NFT standards to encourage developers to build and host NFTs on their blockchains.
In addition, other key characteristics of NFTs include:
1: Not interoperable
This means, that CryptoPunk cannot be used as a CryptoKitties character or vice versa.
This also applies to collectibles such as trading cards; The Blockchain Heroes card cannot be played in the Gods Unchained trading card game.
NFTs cannot be broken down into smaller denominations like Satoshi Bitcoin, they exist exclusively as a complete component.
Since all NFT data is stored on the blockchain via smart contracts, not every token can be destroyed, removed or copied.
The ownership of these tokens is also immutable, which means that gamers and collectors already own their NFTs, not the companies that create them.
We find this contrasts with buying things like music from the iTunes Store where users don’t actually own what to buy, they just buy the license to listen to the music.
4: can be verified
Another advantage of storing historical property data on blockchains is
Items such as digital artwork can be traced back to the original creator, allowing pieces to be authenticated without the need for third-party verification.
Why are NFTs tokens important?
NFTs tokens have become very popular among cryptocurrency users and businesses alike due to the way they have revolutionized the field of games and collectibles.
Since November 2017, nearly $174 million has been spent on non-fungible tokens – NFTs.
Thanks to the advent of the blockchain technology
Players and collectors can become the owners of in-game items and other unique assets that are immutable and exchangeable, as well as earn money from them.
In some cases, players have the ability to create and monetize structures such as casinos and theme parks in virtual worlds, such as The Sandbox and Decentraland.
They can also sell individual digital items that they search for during gameplay such as costumes, avatars, and in-game currency on a secondary market.
What are NFTs and why these symbols mean to artists For artists, the ability to sell artwork in digital form directly to a global audience of buyers
Without using an auction house or fair you allow them to keep a much larger portion of the profits they make from sales.
Proceeds can also be programmed into digital artwork so that the creator receives a percentage of the sale profit each time their artwork is sold to a new owner.
William Shatner, better known as Captain Kirk from Star Trek, ventured into digital collectibles in 2020 and issued 90,000 digital cards on the WAX blockchain showing various images of himself.
Each card initially sold for about $1 and now provides Shatner with passive equity income every time a card is resold.
Why do NFTs have a value?
Like all assets, supply and demand are the main drivers of price in the market
Due to the scarcity nature of NFTs and the high demand for them by players, collectors and investors
Often people are willing to pay a lot of money for it.
Some NFTs also have the potential to make a lot of money for their owners.
For example, on the virtual platform Decentraland, a player decided to buy 64 plots of land and combine them into a single property.
Dubbed “The Secrets of Satoshis Tea Garden,” it sold for just $80,000 due to its coveted location and road access.
Another investor also spent $222,000 to buy a portion of the Monaco Digital Racetrack in Delta Time
As this segment represented by NFT which represents the digital track segment the owner will receive 5% profit from all races that take place on it, including entry ticket fee.
What are the most expensive NFTs?
Dragon the CryptoKitty remains one of the most expensive non-fungible tokens in space, valued at 600 ETH.
The one-of-a-kind “1-1-1” race car from F1 Delta Time also sold for 415.9 ETH in May 2019.
Alien #2089 sold for 605 ETH in January 2021. This token is part of the CryptoPunk pool, the first ever NFTs created.
In all, there are 10,000 different CryptoPunks and only nine CryptoPunks NBA Topshot non-fungible digital card of basketball star LeBron James sold for $100,000.
An Axie named Angel from the NFT-based game Axie Infinity was sold for 30 ETH.
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At the end of this article, I hope you have benefited from the information about what NFTs are, how they work and their characteristics, and you can also share your experiences and questions with us in the comments.