In the recent period, the term non-fungible token, which is abbreviated as NFT, has been popularized. The spread and popularity of these NFTs is primarily due to the sale of some of them for huge sums of money, which made many users search for what they are, including users in our region.
The questions asked by those interested in this field are:
Definition of NFT:
It can be said that NFT is the latest trend in the world of blockchain revolution .
NFT, or Non-Fungible Tokens, are cryptographic objects built on the blockchain that hold special identification tokens and metadata that set them apart.
It cannot be sold or exchanged, unlike other digital currencies such as Bitcoin.
As NFT non-fungible tokens do not perform the function of cryptocurrencies, as they cannot be used as a medium of exchange because they are not interchangeable because there is no similar one to exchange with.
The special construction of each NFT allows for a wide range of applications.
NFTs are an excellent way to digitally represent real-world physical objects such as real estate and artwork.
Since the NFT is based on the blockchain, it can also be used to replace middlemen, connect artists and fans with each other directly without any third party, as well as for identity management.
In other words, NFT eliminates middlemen, simplifies contracts, and provides new markets.
With a simple explanation, it can be said that NFT is like a human fingerprint, as there is no copy of it and it cannot be replaced.
What should you do about NFT?
Cryptocurrencies, like real money, are fungible, which means they can be bought and traded with each other.
For example, one bitcoin is still worth another bitcoin. Also, 1 Ethereum is equivalent to another 1 Ethereum, which is why it is fungible.
Cryptocurrencies are suitable for use as a stable medium of commerce in modern times.
While NFTs change the cryptographic paradigm by making each digital token unique, exclusive, and irreplaceable, making comparisons between NFTs impossible.
Some have likened them to digital passports, where each unique digital token has its own exclusive, non-transferable identity that sets it apart from the others.
It's also scalable, which means you can combine two NFTs to create an exclusive third NFT, just like in the NFT game called "Crypto Kitties".
NFT, like Bitcoin, has unique ownership characteristics that make it easy to identify and transfer between owners.
NFT owners can also provide metadata or attributes about the asset. Coffee beans, for example, might be represented by NFT tokens for you to keep track of.
Artists can also sign their artwork with their names in the metadata to preserve their rights.
The NFT was initially created on the Ethereum blockchain which is subject to the ERC-721 standard specification.
The ERC-721 standard defines the minimum interface for sharing and distributing digital tokens for games, including ownership history, authorization, and metadata.
The ERC-1155 protocol expands on this idea by lowering the costs of processing and storing a non-fungible token while allowing multiple non-fungible token models to be combined into a single contract.
How do NFTs work?
Most NFTs are built on the Ethereum blockchain.
There are also many other NFT-enabled blockchains, which store additional information that enables them to work differently.
It is worth noting that there are no physical elements to the NFT, as it is usable only in digital form. While something physical can be represented by an NFT such as a real estate, or a painting...
As is well known, cryptocurrencies run on the blockchain, which is a digital record or public ledger to check the state of ownership.
The same applies to NFT, as it is also based on the blockchain and records all its information from the date of its inception, transactions, and movement from one owner to another.
Some criticize the accessibility and circulation of these synthetic inventions, but enthusiasts argue that this is close to how things work in the physical world.
Why is the price of NFTs so high?
Anyone should use an NFT to tokenize their “one-of-a-kind” work in theory, and the potential for the NFT to be offered for sale after that could be huge.
Here are some of the most expensive NFTs sold as of the date this article was published.
5000 Days sold for $69.3 million.
CryptoPunk #7,532 sold for $11.8 million.
CryptoPunk #7804 sold for $7.56 million.
CryptoPunk #3,100 sold for $7.51 million.
CROSSROAD Sold for $6.66 million.
Non-fungible tokens go a little further than the relatively simple concept of cryptocurrency.
Complex swap and lease schemes are available for a range of asset types, including real estate, loan arrangements and artwork in modern financing systems.
NFT is a step forward in reimagining this infrastructure and providing digital versions of physical properties.
Certainly the concept of digital representation of physical objects and the use of a unique identity are new concepts.
When these innovations are mixed with the advantages of the blockchain, the most important of which is the tamper resistance feature, it becomes a revolutionary force.
The most obvious advantage of NFT is that it cuts down on the large number of middlemen and facilitates the process of transferring ownership.
Converting a physical asset into a digital asset streamlines processes and eliminates the need for middlemen.
On the blockchain, NFTs represent digital or physical works of art, eliminating the need for agents and allowing artists to interact directly with their audiences.
It also helps companies to grow their business. Non-fungible tokens can also be used to track identities.
For example:
Representation of business identification cards in a company, which must be shown at all entry and exit points within the company building. Individual ID cards can be turned into an NFT, each with its own unique set of properties, to simplify check-in and check-out procedures for officials as another example.
NFT can democratize investment by segmenting tangible assets such as real estate.
It is 100 times easier to distribute digital assets between multiple owners than physical assets between multiple owners.
This coding approach is not just about real estate, as it can also be applied to other forms of property, such as works of art.
As a result, the artwork does not need to be purchased by a specific person. Its digital equivalent would be owned by several people, each of whom would be responsible for a small portion of the artwork as a whole.
Such deals have the potential to increase value and their profits.
The emergence of new opportunities and methods of financing is the most promising opportunity for NFT.
An example of the above:
A piece of land that has been divided into many parts for the purpose of selling it, and each piece has certain characteristics and advantages.
One lot might be near the beach, while another might be a shopping center, and another might be in a suburb.
Each piece of land here is exclusive, priced according to its features, and represented by an NFT that reflects its properties. Real estate trading, which is a complex and bureaucratic process, can be simplified by adding relevant metadata to each private NFT.
The above example is a use case that can be applied to many other things in different situations in our modern world, as NFT becomes more complex and integrated into the financial infrastructure.
The bottom line is that NFT offers the possibility of combining art and collectible attributes which is one of the most effective ways to attract new buyers.
Knowing what NFTs can do, it becomes clear to us what they are and what an important role they can play in the digital future.
Read also:
What are the advantages and disadvantages of cryptocurrencies?
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