What is NFT?
NFT is a current crypto-trend in the digital world and it stands for Non-fungible token. Non-fungible means unique and irreplaceable while fungible means an item that is exchangeable like a dollar or bitcoin. NFT is used to represent real-world items like artworks and real estate and cannot be replaced or exchanged at equivalency. It is the registration of ownership of a cryptographic item on a blockchain with unique identification codes and metadata that distinguish them from each other.
NFTs are used to create authentic artificial scarcity in the digital world. It helps prove authenticity and ownership and greatly influences the emerging economy of digital collectibles and virtual goods. It can be used by decentralized applications for the creation of unique collectibles. NFTs can be anything digital including but not limited to drawings, art, music, videos, games, sport card gif, text, and memes. They are used in a specific application that requires items like crypto art, digital collectibles, and online gaming. It can also be used as a representation of people’s identities and property rights among others.
NFTs have proven to help in the transformation of the of creative activity economy by allowing innovative creators monetize their creations directly through their fans. Converting real world assets to token allows them to be traded efficiently while reducing the probability of fraud. Artworks created on blockchains as NFT gives opportunities for the artwork to be sold globally on decentralized market place.NFTs enables artists to be paid a particular percentage every time the NFT is sold or the owner is changed.
In the gaming sector,NFT can be representative of in-game assets that are controlled by the users rather than game developers. It allows asset gaming tokens to be traded on third-party marketplaces without permission from the game developers. NFTs give anyone the opportunity to be the owner of content with great value on the blockchain by trading and the ownership is transparent for everyone to know.
NFT has created a shift in the crypto market paradigm because each token is unique and cannot be equated to another, therefore it is impossible to exchange one token for another. The asset representation on NFT is likened to a digital passport because each token has a non-transferable identity to help distinguish it from the other. NFT can also be extensible which means one NFT can be combined with another to create another unique NFT.
CryptoPunks were the first NFT to be released in June 2017 on the Ethereum blockchain. This digital art rarity was enhanced by certain traits and character types with only 10,000 CryptoPunks. Most of the arts are focused on humans and others are zombies, apes and aliens. In the last quarter of 2017, Cryptokitties was released. It is a blockchain game on Ethereum that allows players to purchase, collect, breed and sell virtual cats. It was an attempt to make blockchain technology for recreation and leisure which went viral and raise $12.5 million investment.
RareBits, a NFT marketplace and exchange made $6 million in 2018, a NFT collectible game platform named Gamedex was also established. A blockchain based virtual world called Decentraland raised $26 million from an initial coin offering. A blockchain based NFT sneakers called Cryptokicks had it patent held by Nike in 2019.
In February 2021, Dapper Labs recorded over $230 million in the gross sale of the NFT based app that was launched in partnership with NBA. They launched a beta version of NBA TopShot collectibles and tradable NFT based app at the beginning of 2020, they sold token in packs that contained multimedia and data merged together.
In February 2021, digital art worth $6 million was sold on Nifty Gateway by the musician Grime. Nyan Cat a meme animation was sold on the internet market place for just less of $600,000. ‘Everyday’ an American digital artist Beeple’s work was the first artwork to be listed at a prominent British auction house called Christie’s.
NFT have various frameworks to facilitate its issuance. The standard for the issuance and trading of non-fungible assets on the Ethereum block chain is ERC-721 which is the most prominent framework. The ERC-1155 is a recent and improved standard which enables a single contract for both fungible and non-fungible tokens.
NFT Key Features
1.It is indestructible: NFT data is stored in a blockchain through smart contracts. These tokens cannot be destroyed, removed, or duplicated.
2.It is Indivisible: Unlike physical currency or cryptocurrency that can be divided into smaller denominations. NFT exists as a whole item maintaining its worth.
3.It is non-interoperable: An NFT item cannot be used in place of another. For example, a CryptoKitties character cannot be used as a character on CryptoPunk. This applies to all collectibles ranging from sports cards to trading cards to crypto picks.
4.It is verifiable: Ownership is made open to all and historical data of ownership are stored on the blockchain which enables creations to be traced back to the original creator and it allows for the authentication of items without the need for third-party verification.
1.It enables digital representation of physical assets, which can be of great use to the finance system to easily access and secure assets through the digital space that is used in their trading and loan system.
2.It promotes market efficiency by reducing intermediaries like agents and connects a creator with its audience.
3.NFT helps improve and monitor the business process by enabling personnel of a business supply chain to interact with the producer of the NFT collectible and track its provenance
4.They help identity management within the digital world. Conversion of passports to NFTs will help it remain unique and optimize the processes of passport usage in different jurisdictions.
5.NFTs can regularize investing by fractionalizing physical assets like real estate and artwork as it is easier to divide digital assets among multiple owners into fractions than a physical one. The arrangement can increase the worth and avenue of the asset.
6.It helps in the creation of new markets and forms of investments.
NFT is becoming more sophisticated and is being integrated into the financial system which helps improve the digitalization of business.
BitForex is an exchange service platform that can be classified as one of the Top 10 cryptocurrency exchange services. It is focused on providing millions of users with a digital currency trading and investment tool that is not only safe but also professional and convenient. BitForex has a high customer-oriented culture and state-of-the-art financial technology.
BitForex is programmed in a way that it can quickly adapt to the changes of the Crypto market while introducing new features like margin trading, enhanced trading charts, derivatives, and a host of others. The headquarter of BitForex is located in Hong Kong, while there are branch offices in countries like the United States, South Korea, and Singapore.