Why do we need Non-Fungible Tokens (NFTs)
Non-fungible tokens may sound too complicated until you know them better! They are not virtual assets only, but artworks, real-world assets, and much more interesting embodiments you have to know about, and definitely have to try out.
Why do we need Non-Fungible Tokens (NFTs)
Non-fungible tokens may sound too complicated until you know them better! They are not virtual assets only, but artworks, real-world assets, and much more interesting embodiments you have to know about, and definitely have to try out.
We cannot bypass the extremely fascinating use cases for non‑fungible tokens which are considered to be the future of the gaming industry, art, and will be the whole game changer for real estate!
Why do we speak about NFTs today? But first, what are they?
Fungible
To understand the term non-fungible better, we have to define what is fungible.
Fungibility reflects the things from real-world assets and virtual assets that we own and use on a daily basis. For instance, the dollar in your physical wallet or the Bitcoin in your digital wallet refers to a fungible asset. You can replace both of them with some identical assets.
Let's say Alice lends Jack $20. Jack wouldn’t need to give back the same banknote, as all $20 banknotes have identical value.
Non-Fungible
Let's see how it works with non-fungible assets. If Alice lends Jack her rare and unique watch, it's better for Jack to give it back. In case Jack gives her back the first watch he sees in the shop, Alice would be disappointed... Even if watches may look the same in shape and size, the details make all the difference.
How does it apply to cryptocurrencies? Let's talk about Bitcoin which has a fixed supply of 21 million identical coins and how it differs from NFTs.
The thing is NFTs have very exceptional characteristics, and here they are:
Unique. NFT contains metadata that depicts its difference from the rest. This date is permanent and unalterable, just like the certificate of authenticity for a rare painting.
Indivisible. Non-fungible tokens cannot be split into smaller nominations. You only buy them, sell or hold. The main rule of non‑fungibility is that you cannot buy 50% of the watch.
How NFT is made
The NFTs have a couple of standards. The first one is the ERC-721 token, a cousin to the more popular ERC-20 token. ERC-721 is managed by a smart contract code that contains unique details that makes it so rare. The metadata can be kept on and off the blockchain.
How can I use NFT?
The most common use cases of non-fungible tokens are:
Art
Digital artists sometimes have a hard time protecting their copyright, thus making money for a living. With non-fungible tokens, people can purchase a piece of art with proof of ownership based on blockchain. It will allow artists to get a bigger payment too.
Gaming
Today many popular games such as Fortnite disabled the option to sell rare weapons and skins. Non-fungible tokens will allow transferring the desirable items, solving one of the biggest problems of gamers around the globe.
Digital assets
The Ethereum Name Service — which offers. ETH domains — transformed each of their domain names into NFTs so people can buy and sell them. Unstoppable Domains turned their .crypto domains into NFTs too. Decentraland and Cryptovoxels platforms allow their customers to purchase plots of virtual land.