At the beginning of 2021, non-fungible tokens (NFT) made a lot of noise and became one of the most debated branches of the crypto industry.
The number of projects built on the NFT ecosystem has been rapidly growing ever since. And all because NFTs show the potential to change how people make art, buy products digitally, and express themselves.
Let’s take a closer look at what makes NFTs so special and how you can benefit from them.
An NFT is a type of cryptographic token with extra opportunities. One NFT is unique and impossible to be replicated, changed, or supplemented with any data. Once you encrypt your information (a photo, a piece of art, code, etc.) into an NFT, no one else will be able to reuse it without paying you.
In other words, any NFT is a piece of code where you encrypt valuable data and then use it as one digital asset. All the rights for such a token belong to its creator.
The idea of non-fungible tokens is not new. Everything began in 2012 with Colored Coins — small denominations of bitcoin.
At that time, not many users of the crypto world knew about NFTs. There were only several popular projects: Pepe The Frog, CryptoPunks, and finally CryptoKitties, which brought NFTs to the masses and increased their value.
According to Coindesk:
“In February 2021 alonе Nyan Cat’s creator nabbed almost $600,000 in ETH, a single Hashmask sold for $650,000, rare CryptoPunks are going for over $1 million and a chunk of “land’’ in the game Axie Infinity fetched 888 ETH.”
Data from nonfungible.com shows that within just the last seven days, there were more than 40K NFT sales, and the trade volume raised over $61B.
Project history chart according to nonfungible.com.
The thing is that previously, all NFT-based projects were built by a separate team of developers. And in general, in the past, you had to hire your own development team to create the needed smart contracts and release your NFTs. That’s why NFTs were not so easy to work with and, thus, not really widespread.
Now, everything has changed, and you can use NFTs without technical knowledge. All you need to learn is how to buy tokens and choose the most convenient platform for it.
The cherry on top is that NFTs got listed on Coingecko as a separate category, so you can view all the details about it.
But why are NFTs so special? And how are they different from other tokens? Let’s figure it out.
Fungible — something, able to be replaced by another identical item
Assets like Bitcoin (BTC) or Ether (ETH) are fungible, they are all the same and completely interchangeable. The term fungibility means you can exchange cryptocurrencies without loss of their value. The price of each of these tokens is clearly defined and depends on the market.
For example, you can exchange one Ether for any other Ether. So, fungible tokens are like a $100 bill. You can invest it but get your money back in another bill like two $50 bills.
NFTs are different. They cannot be exchanged equally, they have unique properties, and these properties make them special. You can create an unlimited amount of NFTs, but each of them will be unique, meaning it will be one of a kind.
Non-fungible tokens are somewhat like personal ID cards or other documents. The majority of us have ID cards, but all of them are different. Just like this, each NFT contains distinctive information that sets it apart from any other NFT.
Besides, the value of NFTs has every chance to be as high as possible since it comes from their scarcity.
However, it is still not so easy to create an NFT for ordinary artists, as they need to use quite specific tools for that. That’s why, even though non-fungible tokens have received are quite a lot of hype nowadays, they are not mainstream.
Third-parties could use Pontem Blocks* to create custom NFT smart contracts in several clicks with a simple mechanism that doesn’t require any coding skills.
Go through a short Pontem Blocks* demo to try some of the possible usages.
We are happy to see that NFTs are steadily turning into an integral part of blockchain technology. Stay tuned, we are going to talk more about NFT creation in the next article.
👉Telegram chat: https://t.me/pontemnetworkchat
*Pontem Blocks are an example of what can be developed on Pontem Network.
This article does not imply any obligation to implement the ideas described.