After the explosion of DeFi, the area that is being most interested by the crypto community right now is definitely NFT (Non-fungible token). Not only in the world, after the news of Beeple’s artwork in the form of NFT sold for nearly 70 million USD spread on social networks, many Vietnamese users also began to pay attention to the space. this emerging. The NFT trend has also driven many related tokens to skyrocket in recent times. So what is NFT? How does it work? How to apply and how to invest in NFT? In this article, let’s find out with I Love Bitcoin.
What is Non fungible Token (NFT)?
NFT stands for the word Non Fungible Token, which means a unique, non-fungible token. NFT is a blockchain-encoded token representing a single asset, NFTs are not interchangeable. It can be a digital asset, or it can be a digitalized version of a real-world asset. NFTs are seen as proof of authenticity and ownership in the digital realm because they are not interchangeable.
NFTs can be used to buy and sell digital art and can take the form of GIFs, tweets, virtual trading cards, images of physical objects, video game interfaces, real estate virtual and much more. The early days of NFT were associated with the name CryptoKitties, which caused a stir in the market when it clogged the Ethereum network in late 2017. Now after more than 3 years of growth, the NFT ecosystem has gradually improved with many multi-piece pieces. form.
Similarities and differences between NFT and Coin
NFT and Coin are both digital assets on blockchain, they share the same characteristics of anonymity and decentralization. In addition, owners can store NFTs on blockchain wallets, withdrawing for trading similar to coins.
The most special feature of NFT is its uniqueness, which coins do not have. For example, the ETH in my wallet is exactly the same as the ETH in your wallet, only the amount is different. In contrast, the NFT has a unique rarity. For example, a “virtual cat” in CryptoKitties is unique, each has a unique, non-duplicate identity. The important point is that NFTs are not divisible like Bitcoin or Ethereum and are not interchangeable.
NFT is often likened to a hobby of collecting antiques, over time will accumulate value with the expectation that the next transaction will have a higher price than the previous one. The value of collecting lies in personal taste and aesthetic sense. For example, in early February this year, a virtual cat Nyan was sold for $ 600,000 or for example Beeple’s artwork was “locked” for a record $ 69.3 million.
How does Non-fungible Token work?
There are different frameworks for creating and issuing Non-fungible Tokens. But the most prominent is ERC-721, a standard for the issuance and trading of non-fungible assets on the Ethereum blockchain.
A new and improved standard is ERC-1155. It allows a single contract to contain both fungible tokens and non-fungible tokens. The standardization of NFT issuance allows for a higher level of interaction, benefiting users. Basically, unique assets can be transferred between different applications easily.
Just like other blockchains, NFT’s will exist on one address. Notably, the NFT cannot be copied or transferred without the permission of the owner, even the issuer of the NFT.
NFTs can be traded in open markets, like OpenSea. These marketplaces connect buyers with sellers, and the value of each token is unique. Naturally, NFT prices are subject to changes according to the laws of supply and demand in the market.
What can NFT be used for?
NFT can be used by decentralized applications (DApps) to issue unique digital items and cryptographic collectibles. These tokens can be a collectible item, an investment product or something else.
The gaming economy is not new. As many online games already have their own economies, using blockchain to tokenize in-game assets is just another step forward. In fact, the use of NFT has the potential to solve or mitigate the common inflationary problem many games have.
While the virtual world has flourished, another interesting application of NFT is the tokenization of real-world assets. These NFTs can represent fractions of real-world assets that can be stored and traded as tokens on the blockchain. This can help add liquidity to many underperforming markets, such as fine art, real estate, rare collectibles, and more.
Digital identity is also an area that can benefit from NFT’s properties. Storing identity and ownership data on the blockchain will increase privacy and data integrity for many people around the world. At the same time, easy and trustless transfers of these assets can help smooth the global economy.
How to buy and sell NFT
There are quite a few marketplaces that trade NFT items, such as OpenSea, Mintable, Nifty Gateway, and Rarible. There are also more niche markets like NBA Top Shot, which is dedicated to NFTs featuring basketball videos or value tweets like that of Twitter CEO Jack Dorsey.
Here are the steps to participate in NFT trading:
- First you need to prepare a cryptocurrency wallet to buy and store NFT. Of course there must be money in the wallet.
- Second, you need to connect the wallet to the NFT marketplace, where the product you want to buy is located. In particular, when paying, you need to see the transaction fee, because sometimes the gas fee on the Ethereum network is higher than the NFT product you are about to buy.
- After completing the payment, the NFT tokens will be returned to your wallet. Now all you need to do is wait for a good time, when the NFT is worth more, you can sell it.
Some outstanding NFT projects
Decentraland is a decentralized virtual reality world where players can own and trade virtual lands and in-game NFT items. Cryptovoxels is similar, where players can build, develop and exchange virtual assets.
Axies, Lands, and other in-game items that are NFTs are currently deployed on the Loom Network and will be migrated to the platform’s Ronin sidechain to expand the technical infrastructure. Ronin is an application-specific sidechain specially designed for Axie Infinity and is currently in the testnet.
My Crypto Heroes
My Crypto Heroes is a massively multiplayer role-playing game (RPG). Players can level up historical heroes through quests and battles. Heroes and in-game items are issued as tokens on the Ethereum blockchain
Gods Unchained is a digital collectible card game where tokens are issued as NFTs on the blockchain. Since each digital card is unique, players can own and trade them with the same level of ownership as if they were physical cards.
Crypto Stamps are issued by the Austrian Postal service and connect the digital world with the real world. These stamps are used to ship mail just like any other stamp. They are also saved as digital images on the Ethereum blockchain, making them a tradable digital collectible item.
Binance Collectibles is released in partnership with Binance and Enjin on special occasions. If you want to own one, follow Binance on Twitter and search for giveaways.
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