Name Price24H (%)
Bitcoin (BTC)
$66,223.00
3.56%
Ethereum (ETH)
$4,143.21
7.22%
XRP (XRP)
$1.14
4.59%
Litecoin (LTC)
$206.76
10.32%
What is the NFT? An Overview of the Ecosystem of NFT
Instruction

What is the NFT? An Overview of the Ecosystem of NFT

The world of smart users always responds to new changes, the cryptocurrency world has many bright names in electronic transactions such as Defi, IEO .. and most recently Blockchain Game and NFT are what users are looking for.

What’s the NFTs?

NFTs are tokens that we can use to represent ownership of unique items. NFT tokens allow us to tokenize the physical assets/commodities like: arts, collectibles, even properties. . They can only have one official owner at a time and they’re secured by the Ethereum blockchain – no one can modify the record of ownership or copy/paste a new NFT into existence.

NFT stands for “non-fungible token”. Non-fungible is an economic term that you could use to describe things like your furniture, a song file, or your computer. These things are not interchangeable for other items because they have unique properties.

Fungible items, on the other hand, can be exchanged because their value defines them rather than their unique properties. For example, ETH or dollars are fungible because 1 ETH / $1 USD is exchangeable for another 1 ETH / $1 USD.

How is NFT similar and different from cryptocurrencies?

Similar:

  • NFT and cryptocurrencies share the characteristics of blockchain which is “decentralization and security”.
  • NFT is like a cryptocurrencies that can be stored in a blockchain wallet, bought and sold.
  • A bright spot for NFT’s potential is that it has now been developed with many specialized Markets (versions) for exchanging, searching and buying and selling virtual products.

Different:

  • Investing in Coins like BTC, ETH or ADA, BNB, etc. is similar in nature to the way you trade Forex, stocks, etc. Trading activities are done through exchanges.  Buying and selling NFT tokens  will be like collecting antiques in the 4.0 technology era.
  • Coin trading has good liquidity, but the coin is not “unique”.  In contrast, NFT is rare and unique.  A “virtual cat” in CryptoKitties is an unique, and non-duplicating identity.  The key is that the NFT is indivisible and irreplaceable.

NFTs – the internet of assets

NFTs and Ethereum solve some of the problems that exist in the internet today. As everything becomes more digital, there’s a need to replicate the properties of physical items like scarcity, uniqueness, and proof of ownership. Not to mention that the digital items often only work in the context of their products. For example you are not able to resell an iTunes mp3, or you can not exchange one company’s loyalty points for another platform’s credit even if there’s a market for it.

The following description explains how the internet with NFTs differs with the traditional internet:

Application of NFT in life:

  • Art: Artworks are currently one of the most  popular NFT use cases. Using NFTs will help the author to protect his/her own-copyrights.
  • Licenses and certificates: NFT is  used in the field of licenses and certificates.  Some universities in the world apply NFT in course materials and documents. They want the course materials to be unique documents for them only in the world. Other universities would not be recognized that course materials as their own copyright assets
  • Game: Currently, NFT in games is really up trending and applied at most. However, it is just a start. The growth waves of game NFT application would be further long run in the cryptocurrency market.
  • Currently, NFT in games is really up trending and applied at most. However, it is just a start. The growth waves of game NFT application would be further long run in the cryptocurrency market.

How do NFTs work?

NFTs are different from ERC-20 tokens, such as DAI or LINK, in that each individual token is completely unique and is not divisible. NFTs give the ability to assign or claim ownership of any unique piece of digital data, trackable by using Ethereum’s blockchain as a public ledger. The  NFT tokens are iminted from digital objects as a representation of digital or non-digital assets. For example, the NFT could represent:

  • Digital Art:
  • GIFs
  • Collectibles
  • Music
  • Videos
  • Physical  items:
  •  Car’s owner registration
  • Physical ticket
  • Tokenized invoices
  • Legal documents
  • Signatures

There are upcoming items that are able to apply as the NFT tokens.

What is NFT used for?

NFT token can be used by decentralized applications (DApps) to issue digital items and cryptocurrency collections.

What about the real world?

 NFTs can be stored and traded as tokens on the blockchain.  That can provide much-needed liquidity to a lot of markets that otherwise wouldn’t have many participants.  For example, fine art, real estate, rare collectibles, etc.

Pros and cons of Non-fungible tokens (NFT):

Advantages of non-fungible tokens:

Indivisible:

The NFT is known to be an intact asset and it is indivisible.  Unlike the crypto-currencies such as BTC or ETH, all of them can be split and transactions are performed as fractions.

Cannot be destroyed or copied:

 All NFTs are unique.  NFT data will be stored on the blockchain platform through the smart contract and it is almost independent.

Digital artworks sold as NFTs will always be original, unique, and second copy is impossible.

Can verify:

Anyone can easily track the historical works of the creator. It does not need any interference from the 3rd parties.

Defect:

  • Every transaction such as creating NFT or bidding, transferring ownerships in NFT market places.
  • Critics have argued that the NFT is an investment fad.  It can only last for a short period of time.
  • The most obvious weakness of the NFT is illiquidity.  The total trading volume of NFT so far is only about 300 million USD.  By comparison, this is only 0.1% of the cryptocurrency’s spot volume in ….a single day.

Steps to buy and sell NFT

  1. First, you must have a crypto wallet to buy and store NFT. Obviously, the crypto wallet must store enough cryptocurrencies to be able to trade the NFTs.
  2. Secondly, connect the wallet to the NFT selling platform that you want to trade.  When you’re at the transaction, you should observe carefully on the gas fee. Sometimes, the ETH gas fee is higher than the value of NFT.
  3. Finally, the token will go into your wallet after successfully trading. With a Dapp-integrated crypto wallet on NFT transactions, you can set a price to place, sell or accumulate until the time is right.

The Potential of NFTs

NFTs are a new, promising technology, and there is a lot of room for future growth.  Currently, the Market Cap of NFTs is too small, with a total capitalization of only $300 million for projects that have real users, smaller than the capitalization of a recent DeFi market.

The main application of NFTs is just blockchain games, like Crypto Kitties or Sandbox.  However, it has a lot of potential, since 2020, a series of European football teams such as Arsenal or Juventus, Westham … are intending to cooperate with the Winklevoss brothers to launch collectible cards of the teams.  famous football player.  This reason makes the greatest potential of NFTs: The ability to access huge capital.

Conclusion

Digital collectibles open up entirely new avenues with blockchain technology.  By representing physical assets in the digital world, NFT has the potential to become an important part of not only the blockchain ecosystem, but the broader economy.

Leave a Comment

Your email address will not be published. Required fields are marked *