Everything You Need to Know about NFT

4 MINS READ

Let’s start from the very beginning. NFT is an abbreviation that stands for non-fungible token.

It is a technology that will significantly impact all areas of our lives because it allows you to digitize the interaction with any virtual and physical goods. Ok, but how does it happen? Let’s figure out how NFTs are arranged.

 

Non-Fungible Token: Explanation

In general, non-interchangeability is an absolutely natural property of things in nature, we are used to it, and most things around us are not interchangeable.

Non-fungible is a thing that is unique due to its characteristics and cannot be formally replaced by precisely the same thing.

It is easier to explain with examples. Currency is a classic example of a fungible asset, and any dollar is equal to another same dollar.

There are many more non-interchangeable entities: for example, your dog. It is unlikely that you will agree to replace it with another dog of the same breed. Your apartment is unique. Phone, car, and sneakers are also impressive; although initially, they were no different from others of the same model, you made them special in the process of ownership.

NFT is a digital certificate that represents a unique object.

We can attach an NFT to any digital product such as an image, video, audio, etc.

The token will contain all the information about the product. A token is an exclusive right to a product. We perform all these operations with the product itself by owning, buying, selling, or exchanging a token.

Since the tokens are stored in an open and distributed blockchain, information about this product, its owner, and the history of operations will always be available and reliable. We can always know who made which product and who it currently belongs to.

NFT technology potentially allows you to tokenize, transfer to the blockchain any product — even physical. But there are still many complex tasks. But digital goods are ideal for tokenization simply by their nature.

What can be tokenized:

  • digital art
  • game items: weapons, skins, characters
  • any objects in virtual universes, for example, earth
  • anything

Tokenization adds to any digital product many useful features that increase the value of this product.

 

Liquidity

No one will buy something that they are not sure of its originality. It is easier to sell if you can verify the uniqueness of a digital work of art.

You cannot sell the legendary sword from the game if the developers have not provided a particular marketplace.

The NFT Sword from the crypto game can be sold on any marketplace. It will go to your wallet, which connects to the game, and the game will see that this sword is now yours. Thanks to NFT, the sword’s value is not only that it will help you get high in the game, and you can sell it and finally get a girlfriend when you get tired of playing.

 

Versatility

In English, this is usually called Interoperability.

Previously, items from the game remained only in this game. Imagine that with a sword from one game, you can cut down terrorists in another. Or ride Roach around Vice City.

 

Programmability

Firstly, this means that complex mechanics can be incorporated into the properties of a digital object when it is created. For example, what kind of offspring will your CryptoKitt give.

In addition, thanks to smart contracts, any complex transactions have become possible with currencies, financial instruments, and things. For example, you can get a deposit on digital art or the same legendary sword from the game.

 

Spheres Where NFTs Are Used

Games

Games are now the largest digital economy sector with many entirely non-interchangeable items. And they can significantly benefit from the introduction of NFT. Each in-game item becomes more valuable when it is tokenized. And therefore, the game itself becomes more valuable for the user. And developers will no longer be forced to use complex models to pump money out of the player.

Also, NFTs and blockchain enable the Earn to Play model in games.

It’s already happening. To withdraw funds, you have to use unofficial marketplaces, where there is little trust for both the seller and the buyer.

Any asset in the blockchain game is easily transferable by nature, and therefore, games can become a real income for many. In probably the most famous crypto game, Axie Infinity, some players from third-world countries earn more in games than they would earn offline.

Best projects:

CryptoKitties;

Axie Infinity;

Sorare.

 

Metaverses

Virtual universes or Metaverses are virtual worlds that give a sense of presence in space and time, social interaction, as well as the opportunity to take part in the virtual economy of the world, which has a significant impact on the community that makes up this virtual world.

Examples of traditional virtual worlds are Minecraft and Roblox.

Second Life also claimed to be the most universal, but they did not survive.

It seems to me that they lacked exactly what blockchain and NFT technologies give virtual worlds – a sense of real ownership and an understandable economic model.

Everything that belongs to you in the blockchain metaverse belongs to you in the form of NFTs. Land, buildings, clothes. And most importantly, you can bring any of your NFTs to the metaverse. For example, you can buy crypto art from SuperRare and hang it in your home or gallery.

Metaverses and blockchain technologies are made for each other. What is provided in the real world by physical and legal laws is provided in the digital worlds by the blockchain.

And the metaverses are a great ecosystem. In the virtual world, you need to do something, and the developers do not have enough hands to realize all the possibilities from the real world themselves. That is, the metaverse is such an AppStore for which you can create your games and applications (for example, car racing), and internal purchases in these applications will be paid for with cryptocurrency.

The metaverse is the future. I’m sure that in a few years, a fair amount of the population will be spending most of their time in the metaverses.

Best projects:

Decentraland;

Spheroid Universe;

Sandbox.

 

Art

CryptoRenaissance – that’s how I want to call what is happening now with art, thanks to NFT.

Like five centuries ago, habitual values change before our eyes and are reflected in art. Like five centuries ago, a technology arose that turned everything upside down. Then it was typography, and now it’s blockchain. And most importantly, the artists finally received financial support, which allows them to devote all their free time to creativity and explore with its help the changes happening to society.

Some digital artists deny allocating “crypto art” in a separate direction. Yes, it’s an inclusive term. But if you look at crypto art for a long time, it starts to look at you; then it becomes evident that all these works are united not only by the fact that they are tokenized. The choice of topics, styles, and artistic techniques create a rather homogeneous world, for which it is already possible to single out a separate term, “crypto art,” although not yet fully formed.

And now to the daily bread. The programmability of the NFT allows, for example, making royalties automatic. That is, you will be able to receive% of each resale of your work. And it will not depend on the willingness or unwillingness of the intermediary to pay you. The commission is written in the smart contract and automatically goes to your crypto wallet.

Best projects:

Rarible;

SuperRare;

OpenSea.

 

Collecting

The second area of ​​life, after art, is that NFT technology has had the most significant impact on. Going from physical collectibles to virtual ones wasn’t all that difficult. I think this happened because, as in the case of art, tokenization added value to these objects, creating new valuable properties and eliminating disadvantages. For example, virtual sports cards are pictures and videos and any other information in general. It has become easier to sell and change them, and NFT cards do not deteriorate.

In general, collecting is what, in my opinion, is driving NFT and blockchain into the mainstream right now more than bitcoin.

Best projects:

CryptoPunks;

Bored Ape Yachting Club;

Hashmasks.

 

Starting With NFTs

What You Need To Know About NFTs

First, decide which area you are most interested in. You can start with Axie Infinity or Sandbox if you are a gamer.

If you are closer to art, you can try to buy something inexpensive on OpenSea or Rarible or mint your NFT.

In any case, you will need to have an Eth wallet. With the help of your wallet, you will log in to all sites; in most cases, you will not need to enter anything additional, neither email, nor login, nor password. Your Eth wallet will already uniquely identify you with your public and private keys. It is very convenient. Exploring the possibilities of so many platforms has never been as convenient and fast for me as in the Ethereum ecosystem. No confirmation emails and long SignUp questionnaires!

For all transactions with ETH, you will need to pay a small commission, which will go to people who contain the computing power that ensures the operation of the blockchain. Read more about how this commission is calculated and paid here. But it is enough for us to remember that there is such an entity as gas, which is the fuel for operations in the Eth network and is bought with Eth.

To buy NFT, you need gas. You need gas to mint your NFT.

And gas is expensive now. This is the main problem of Ethereum, but it is already being solved.

 

Buying NFTs

If you do not have five free ethers and are not yet an expert in the NFT market, it is better to start buying from inexpensive lots on Rarible or OpenSea. Focus on your taste and what you like. Not every NFT can resell later for more, so buy the work you would like to own. Or the work of the author you want to support. Russian-speaking artists hang out, for example, here and often throw links to their work so that you can support your compatriots.

Do not forget that you will need to pay for gas in addition to the price of the NFT itself, and this can cost you 0.03 – 0.07 ETH, depending on the network load.

Purchases are instant; there are auctions.

It’s easier to buy on Rarible; on OpenSea, it’s more challenging – a new wETH entity or wrapped ether comes into play there. But it was invented, among other things, to save on gas, so treat a little complication with understanding. All the details of NFT purchases require separate guides, of course.

 

Issuing NFT

The release of your NFT, that is, the tokenization of an object, is called minting.

The easiest way to minify your work, even if you drew it in 5 minutes in Paint Cinema 4D, is to do it in Rarible or OpenSea.

On Rarible, your work is minted immediately, so you have to take a chance and pay for gas. And there, whether they buy it or not, it depends on the work.

OpenSea – uses lazy minting – that is, you just prepare everything for minting, and the actual release of NFT with a record in the blockchain and, accordingly, gas consumption, will occur only if there is a buyer for your work.

I won’t go into details about the difference between releasing work under your token (it still requires a lot of gas) or under the site’s token (RARI, for example). Still, both significant marketplaces allow you to do both.

 

Conclusion

NFT technology allows you to digitize and interact with any product more conveniently. Ownership, purchase, sale, confirmation of originality.

Tokenization adds value to a product.

This technology has already revolutionized art; games are next in line.

  • What do I need to know about NFT?

NFT is a digital certificate that represents a unique object.

  • Is NFT a good investment?

Non-fungible tokens, or NFTs, are becoming some of the most profitable blockchain-based experiments in history, and they give a bunch of opportunities.

  • Can you make money with NFT?Yes, you can. Trading NFTs can be very profitable, especially if you own some rare or trendy pieces.

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