What are Non-Fungible Tokens? – Everything you need to know about NFTs
NFTs or Non-Fungible Tokens are the new talk of the Crypto town. While investors and artistic creators can’t stop raving about NFTs, many people have their reservations about them. Some are just confused as to what NFTs are, while others don’t know how to invest in them. NFTs use distinct identification codes and metadata to establish unique valuation. Contrary to fungible tokens like other cryptocurrencies, there is no standard exchange rate for all entities. NFTs are non-fungible, which means no two entities will be identical or have the same valuation in a transaction.
What is an NFT?
Let’s start by talking about what exactly is an NFT and what are the merits of non-fungible tokens. You’d also want to learn how it is different from other cryptocurrencies in its use and functionality.
NFT is short for Non-Fungible Token. While it follows the same construction and programming as Bitcoin or Ethereum, the transaction and trade mechanism is completely different. Cryptocurrencies, like regular money, are fungible with a unique equivalency for each entity. One Bitcoin would be identical to another Bitcoin for exchange and transactions. This is not the case with NFTs.
NFTs can be unique digital items like digital art, music, or any piece of uniquely identifiable data that can be traded. These cannot be broken down into uniform entities or standard values. Thus, each token (NFT) will have a unique value by default.
What items can be NFTs? It can be anything from digital imagery, art, videos, music, or any creation or even data that you can claim uniquely. Since there are no limitations to what can qualify as an NFT, it opens up a wide spectrum for sellers, buyers, and collectors who can carry out exchanges readily. Even real-world objects can be established as valued NFTs, thus opening up a new chapter in the domain of blockchain trading.
How NFTs Work
Before learning about popular NFT marketplaces and how to buy or own an NFT, let’s have a look at how NFTs work. You can create, collect, and sell NFTs that will be traded over a decentralized Ethereum blockchain.
For creating NFTs, you need a unique piece of content. What fits the bill is still being explored, with absolutely random NFTs surfacing around the corner. Some popular NFTs include the Nyan Cat, which sold for about $600,000, and a LeBron James highlight that brought in over $200,000. Various celebrities like Lindsay Lohan and Snoop Dog have taken the plunge to create NFTs with their artwork and memories to create a unique value for each piece. Any picture, video clip, or original piece of content can qualify to be an NFT.
After you create an NFT, it needs to be introduced to the blockchain in the form of a token. The ownership of the NFT, transaction history, and other details are included as the NFT is appended into the ledger and becomes a part of the Ethereum Blockchain. Comparable to other forms of currencies, the NFT now becomes a part of your e-wallet. The validation process with the blockchain helps you authenticate and retain the original ownership of an NFT.
Consequently, the e-wallet can be used to carry out trades, transfer ownership, and make amendments to an NFT contract. To get started with the selling and trading process, you can choose an NFT marketplace and start trading. Popular marketplaces like OpenSea.io, Foundation, Rarible, Makersplace, and Nifty Gateway allow buyers to bid for an NFT and make a purchase for a listed item.
You can also buy and collect NFTs, on the flipside and make an investment. Much like other cryptocurrencies, a purchased NFT can gain value appreciation over time and can be a way to generate profits through investment.
The general mechanism of NFT functionalities at the blockchain level can be illustrated as shown:
Significance of NFTs and Future Scope
Now you know what NFTs are and how they work. But are they worth the raving? Should you actually invest in NFTs, and what is their significance at large? NFTs are likely to have a wide-ranging future scope.
It is highly likely that NFTs will soon be popularly used for investment in physical assets like valuables and real estate. Digitally, these transactions can be made simpler and much more secure. The ownership of these entities also need not be singular anymore as multiple owners can share an entity with distinct tokenization. The revenue and value of physical assets can shoot up as a result of this.
New markets and entirely novel forms of investments can also emerge as a by-product of NFT technology. While a complex and layered or shared exchange can take place, the process will be made simpler due to the NFT working mechanism. Thus, it is fair to say that NFTs suggest there’s a lot in store for sophisticated trading and robust financial infrastructure in the times to come.
Despite the limitless possibilities, currently, NFTs are pretty new to the picture. When it comes to making personal investments and trades, it is important to do your research and weigh the possibilities. At the end of the day, NFTs are subject to market risks, just like any form of trade, and due caution can go a long way to ensure a healthy chain of investments
Launch of NFT Marketplace by Binance and FTX
NFTs are unique digital tokens tied to digital content. They are based on blockchain technology, which proves their authenticity and ownership. A number of NFTs are already listed on the marketplace, which is hosted on both the main FTX exchange and the FTX.US exchange websites.
Also, Binance picks 100 artists to spearhead the launch of NFT marketplace. After the marketplace launches on June 24, only these creators will be able to sell their artworks for the first week. Anyone with a Binance account will be able to access the marketplace to buy and resell NFTs. Source: The Block Crypto
NFTs are collectibles that exist on the blockchain and represent digital items like photos, videos and audio.
Solana, Binance Smart Chain, Ethereum and Polkadot are some of the most most common blockchain used by today’s artist to launch their NFTs
Metaplex Foundation Launches Solana-Based NFT Marketplace. According to Coindesk “Metaplex will do for NFTs what Shopify did for commerce, but takes it one step further by not acting as the middleman,” said musician RAC.”
On the other hand, Airlift and Refinable are some of the recently launched NFT marketplace on Binance Smart Chain (BSC) with extremely new features then that of any other popular platform like Opensea or Rariable which are based on Ethereum Blockchain.
New innovative Layer1 platform with promising future: Introducing Aurora Network
Aurora aims to become the pioneering platform in building an infrastructure for social networks, financial applications, and NFT solutions while still delivering the “Community Values on Blockchain”. Aurora Network applies an innovative technology to improve and enhance the blockchain’s performance in terms of transaction speed, security, transparency, and scalability, which are prominent issues with the current Ethereum. (Source: Techbullion)
With its blockchain technology, Aurora not only provides a complete safety measure for Personal Identity, but also forms a bridge between decentralized finance and centralized finance. In other words, Aurora is bringing real-word assets to Blockchain through NFTs.
Governance in Aurora
Governance is critical to the development and adoption of any platform because – as with all other types of systems – Aurora will also face natural evolution and updates.
Aurora is designed to be a public permissioned chain pegged to many other networks. From an architecture standpoint, Aurora blockchains can be divided into three conceptual layers:
Application: Responsible for updating the state given a set of transactions, i.e. processing transactions.
Networking: Responsible for the propagation of transactions and consensus-related messages.
Institutions, Enterprises, and Governments
Aurora is the best verifiable platform for institutions, enterprises, and governments. Launch assets, build applications and create subnets with complete control over your implementation with compliance, data security, and other rulesets built into the foundation.
- Asset Issuance & Trading
- Debt Financing
- Digital Identity
- Document Tracking
- Fund Management
- Intellectual Property
- Real Estate
- Supply Chain
- Trade Finance
- Non-Fungible Tokens (NFTs)
Mint your own NFTs in seconds for fees less than a cent. Digitally prove ownership, and streamline value flow. Create and share art, collectibles, and more with all the benefits and none of the downside.
- Certifications and Licenses
- In-game Items
Decentralized social networks have provided another answer to data privacy and security. On federated social networks, users can create accounts without having to link to real-world identities, like email addresses or phone numbers. Furthermore, these networks often rely on public-key cryptography for account security, rather than relying on a single organization to protect user data.
By shifting to decentralized versions like Aurora, providing an infrastructure to a permissionless, secured and scalable platform which supports a wide range of applications such as social networks, businesses building or simply dApps will regain much of the power they lost when using centralized infrastructure.