What is an NFT (non-fungible token)?
A non-fungible token (NFT) is what its name suggests: a cryptographic digital asset that cannot be exchanged for another coin of its kind. The scope and overall usage of NFTs has increased greatly over the last two years — recently they have been covered in the media and discussed at length on social media. The most important solutions NFTs provide are digital ownership, copyright establishment and the ability to prove the true value of assets in a digital environment.
Real-world objects or digitally produced creations are represented as NFTs on platforms and then sold either via direct sale or by auction on the same sites. Many platforms specialise in different areas or types of NFTs. Some of the most popular NFT platforms include: Rarible, specialising in collectables; Decentraland, which creates virtual reality environments; Enjin, which specialises in collections related to games and Nifty Gateaway, which is popular for NFTs representing digital art. SuperRare and Opensea are two popular platforms that don’t specialise in any particular area. Beyond this list, you have many more options for creating your own NFTs or purchasing NFTs.
The most important feature that sets NFT tokens apart from cryptocurrencies is that they are indivisible. NFTs cannot be split up and can only be transferred as a whole.
There has been a recent development: now, for the first time, an NFT produced on one platform can be moved to another platform and put up for direct sale or auction. On certain platforms you can make payments by integrating existing hot wallets, set up on your computer or browser. On others you can use the site’s built-in wallets.
The virtual representation of physical and digital assets, transferring of copyright and storage techniques are created with unique, non-fungible tokens, namely NFTs, on the blockchain. Creators upload and register objects on the blockchain so that proof of originality, circulation details and ownership cannot be tampered with later. The features outlined are all made possible thanks to the characteristics of the ERC-721 token standard — the standard for the majority of NFTs. This token standard which allow NFTs to be unique and distinguished from one another, was introduced to the world by William Entriken, Dieter Shirley, Jacob Evans, Nastassia Sachs in January 2018 and is now the standard for smart contract APIs. Although the ERC-721 standard was introduced a lot earlier, it has achieved its full potential in combination with the Ethereum network.
In NFTs, the number of tokens in circulation is limited.
The fact that they cannot be exchanged other coins of their kind, coupled with the strength of blockchain to ensure ownership rights, signals that NFTs will continue to expand into other areas of life.