Recently, there has been a lot of buzz about Non-Fungible Tokens or NFT’S in the crypto space. Despite the increased attention on these unique digital assets, many crypto traders still don’t understand what NFTs mean.If you want to learn about Non-Fungible Tokens, then this article is precisely what you need. This guide will provide you with an introduction to NFT’s. Additionally, this article will discuss the uses of NFT’s and reveal some of the best NFT projects currently available in the crypto space.
What Are Non Fungible Tokens ?
A non-fungible token (NFT) is a cryptographic token that uses blockchain technology to link with a unique digital asset. Each NFT created has its unique identification code and metadata, distinguishing it from other digital tokens and NFT’s. Due to their non-fungible nature, NFT’s cannot be replicated.To fully understand the meaning of an NFT, you will need to first understand what the word “Fungible” means. So what does the word Fungible mean, and how does it apply to NFT’s. The next section of this article addresses these questions.
Fungibility: What Does It Mean?
Fungibility can be described as the ability to exchange an asset for a similar asset without affecting the value of both assets. As a general rule, fungible assets have certain characteristics, including divisibility and value. Let us briefly explain this point with an illustration using a $100 bill.It is common knowledge that one $100 bill has the same value as another $100 bill. Therefore, if someone borrows a $100 bill from you, the person is not required to return the same note. As an alternative, you can receive another $100 bill from the person. In the same way, the person can pay you back with two $50 bills or five $20 bills.We can see from this illustration that fiat currencies are fungible, which makes it possible to divide them and replace them while maintaining their value. Fiat currencies are not the only fungible items available today.Popular crypto assets like Bitcoin, Ether, Monero, Solana and many others are fungible tokens. They are described as fungible because they can be divided and replaced yet still maintain their value.https://www.youtube.com/watch?v=gcztbmSmyCM&t=7sConsidering the definition for Fungible assets, it is evident that NFTs are not divisible, non-replaceable. Similar to that, they are impossible to duplicate. Furthermore, each NFT asset has its unique value compared to other NFT assets.The properties of each NFT token determines the uniqueness of such an asset. They share some characteristics with actual non-fungible items, such as art, real estate, rare stones, and luxury collector’s items.
Properties of A Non Fungible Tokens
NFTs have three main properties; they are unique, rare, and indivisible. Let’s examine each of these properties in more detail.
One of the most noteworthy characteristics of each NFT asset is its uniqueness.. Each NFT created has its unique identification code and metadata, distinguishing it from other digital tokens and NFT’s.
The scarcity of non-fungible tokens makes them highly sought after. As a result, NFT developers usually limit the number of NFT’s they create to ensure their rarity and cause scarcity in the markets.
Non-fungible tokens are generally indivisible into smaller units. Buyers who choose to purchase an NFT asset must pay for the complete NFT token. It is impossible to acquire a part of an NFT.
What are the Uses Of NFTs Or Non Fungible Token ?
There are several use cases for NFT’s in the online digital space. They may be utilized as collectibles, digital assets, or digital gaming elements. Additionally, NFT can help prevent identity theft.
Similar to other real-world non-fungible assets, NFTs have a use case as a collectible item. Although relatively new, there is now a wide range of NFT collectors available in the crypto sphere. Additionally, a growing number of collectors are becoming interested in non-fungible tokens.
Although not commonly available, NFT’s can be used as a digital asset for purchasing goods. An example of this is ENS (Ethereum Name Service), which allows users to buy and sell.ETH domains using Non-fungible tokens. Similar Decentraland allows crypto investors to purchase virtual land using the NFT’s
NFTs are becoming more popular in the gaming industry due to several factors. Among other things, the tokens help to solve some fundamental problems in these games. For Instance, popular games like Fortnite prevent the sale of rare traits and accessories. These include special weapons and skins. However, NFT’s introduction has made it possible to transfer these game features to other top games. This feature has helped users create in-game economies that now provide profitable opportunities to sellers of NFT’s.
Prevention Of Identity Theft
Today crypto traders can effectively combat identity theft by using NFTs. All that is required is for users to store their items digitally. These items may include pictures, videos, medical records, and academic qualifications.For copyright purposes, digital artists can also create NFTs from their work. Additionally, they can be used to differentiate between genuine and fake tickets for sporting or musical events. To accomplish this, organizers simply need to digitize all original tickets.
What are the Advantages of NFTs Or NON Fungible Tokens ?
Several benefits are available for crypto traders who use Non-fungible tokens. Let us briefly consider three main advantages attached to NFT’s.
In contrast to exchange-traded fungible tokens, NFTs can be bought or sold on special marketplaces. However, these tokens are only valuable if they are unique.
Non-fungible tokens are authentic due to blockchain technology. As a result, all NFT’s are original. Additionally, it is almost impossible to duplicate or recreate an NFT because of blockchain technology.
NFTs are vital to preserving the ownership rights of digital assets. This feature is also down to the blockchain technology that powers these tokens. As a result, NFT’s can not be changed or altered after they have been created.
Common Problems Associated With NFTs
There are no perfect systems or networks. It is therefore only rational to expect that manufactured systems have some negatives. The main issue with NFTs is that traders must understand blockchain technology to trade them correctly.Generally, blockchain technology is not really user-friendly. As a result, NFT’s traders need to learn how to authenticate, purchase, sell, and store their NFT assets. This problem limits the number of individuals who are interested in trading NFT’s. Several developers are working to make decentralized platforms to use. Thus, we expect to see a more user-friendly NFT marketplace within a short time. Another issue with NFT’s is down to transaction fees used for purchasing these assets. Since most NFT projects are built on the Ethereum network, the transaction fees attached to purchasing an NFT project are usually high.There may be instances where transaction fees are equal to half of the total NFT value. Due to this problem, potential traders are avoiding Non-Fungible tokens. Ethereum developers are well aware of this issue and are aiming to eliminate costly transaction fees with the Ethereum 2.0 platform.
The Best NFT Projects
Non-Fungible tokens have grown exponentially in the past few months. As a result, we have seen an increase in NFT-focused products and projects. These products range from NTF marketplaces to gaming networks. The following are five of the most successful NFT projects available today.
OpenSea is a major online marketplace for art and collectibles made from NFTs. The platforms offer a variety of NFT items, from virtual pets to virtual plots of land. Additionally, they offer ENS on their platform. OpenSea allows users on its platform to make payments using several digital assets like ETH and DAI.
Async is a marketplace for NFT artwork that enables users to buy and sell NFTs. This marketplace also offers users a chance to create their NFT projects. Moreover, Async gives art creators the ability to easily define the look and behavior of their artwork with its programming features. These programming features also allow users to purchase and customize sections or layers of an NFT artwork on the platform.
CryptoKitties is a top-rated NFT game built on the Ethereum network. This ETH-powered decentralized protocol lets users collect, breed, buy and sell, virtual cats. As an Ethereum powered project, CryptoKitties relies on smart contracts to carry out all of its processes.When sold on marketplaces like OpenSea, virtual cats created in this game can be quite expensive. So far, the most expensive Cryptokitty to be sold was a virtual cat named dragon. This NFT sold for $1,344,555 or 600 $ETH.
Ethereum Name Service (ENS)
Ethereum Name Service is a domain name service project that was launched in 2017. According to Ethereum’s ERC-721 standards .ETH domain names can be considered NFTs. Thus, the .ETH domain is available on several NFT marketplaces as a tradeable asset.
Decentraland is a unique NFT project that focuses on creating a virtual world meant for distribution. The project allows users to purchase virtual plots of land. Owners of lands in the Decentraland are issued with a special digital passport. The most expensive virtual land sold on Decentraland costs $913,228.20. The digital land was divided into 259 parcels, representing about 16 acres of space.