Non-fungible tokens (NFTs) were first introduced back in 2014 and have grown significantly in the last couple of years. They took the digital world and changed people’s perspective on art, collectables and ownership.
NFTs are the unique and creative digital assets produced out of the imagination and creativity of the tech enthusiasts, investors, collectors and particularly of artists. They were valued in 2021 worth $16 billion and are believed to gain the worth $210 billion by the end of this decade.
Non-fungible tokens are opposite to the renowned crypto assets i.e., Bitcoin (BTC) and Ethereum (ETH) which are fungible, divisible and not that unique. On the other hand, NFTs are unique in the sense that these are non-fungible, and cannot be exchanged like other altcoins or tokens.
What are NFTs?
Non-fungible Tokens (NFTs) are a unique kind of digital asset having proof or ownership of a particular item which can be a collectible or a piece of content, over a blockchain technology. These are called non-fungible hence they cannot be traded on a like-to-like basis.
As NFTs are very convenient to sell and purchase without the interference of any third party, it has gained much attention from the crypto community. The concept of NFTs is being employed in different fields i.e., tickets, gaming, music, arts and a few other types of collectibles.
NFTs give confidence to the artist to create their own unique NFT in the form of digital work and assures secure ownership and track the provenance. NFT items can be easily sold and purchased in the well-reputed NFT markets.
The NFT market is evident of several non-fungible tokens (NFTs) in the last decade. Although NFTs have been going through a decline phase these days still there are a number of NFTs which well-known and are the word of mouth of the crypto community.
Among several NFTs, there are few tokens which have been sold and purchased for a massive amount. CryptoPunks, Beeple’s “Everydays: The First 5000 Days”, NBA Top Shot, Art Blocks, CryptoKitties, and Board Ape Yacht Club have marked their names in NFTs’ world. They produced thousands of NFTs which are circulating the NFT market and have profited artists, crypto enthusiasts and traders.
How Do NFTs Work?
NFTs are created by employing smart contracts which have the ability of self-execution contracts to tackle the terms of transactions. For instance, if you have paid for the NFT digital art, the smart contract will automatically transfer the ownership to you after the successful purchase.
After that, data is added to the blockchain and becomes part of its permanent record. The data of the transactions and the digital artwork is stored on the blockchain. There is a wide range of blockchain, the NFTs’ data is mainly stored on Solana and Ethereum Blockchain.
Distinguishing Features of NFTs
- Allow users to directly sell or purchase digital artwork without the interference of intermediary
- Entrust the ownership and authenticity of digital assets to the customers
- Have the potential to be equal to the real word asset
Types of NFTs
It is believed that everything can be turned into NFTs and it gains more value due to their speciality, scarcity and a few other particular attributes. Even a painting can be photographed and turned into a PDF which is called NFT memorabilia. A few significant types of NFTs are given below;
Art and Collectibles: Popular NFTs include digital art and collectables like illustrations and animations, resembling physical collectibles in digital form.
Generative Art NFTs: Generative art uses AI or algorithms to create music, literature, and visuals.
Gaming NFTs: GameFi, blends blockchain, NFTs, and gaming to offer a fun way to earn in-game income through play and trade.
Profile Pictures NFTs, Fashion NFTs, Domain NFTs, Music NFTs, and Content and Publishing NFTs are the few other types of NFTs trending these days.
NFTs work by using blockchain technology to create unique, verifiable, and tradable digital assets. These assets can represent a wide range of digital or physical items, including collectibles, art, music, digital real estate, and more.
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