What Is NFT And How Does It Works – A Comprehensive Guide

As tech-savvy and socially adept individuals, we share memes, infographics, jokes, artwork, and other digital assets with our friends and family for entertainment, information, or to publicize an event. Have you ever wondered who created those assets or where they came from? Non-fungible tokens (NFT) are the answer to these debriefs.

A non-fungible token named Crypto Punks was released on the Ethereum Blockchain in 2017 by American Studio Larva Lab. It was a two-person team back then, composed of John Watkinson and Matt Hall. The same year, another project called Crypto Kitties was released that went viral immediately. A whopping $12.5 million is expected to be invested.

Throughout this article, we’ll explore non-fungible tokens, what is NFT, how they started, how they became popular, and how they came into existence. We’ll also discuss how to create non-fungible tokens, their characteristics, their advantages, risks, and their prospects.

What is NFT?

Non-fungible tokens represent intangible and tangible items, such as paintings, virtual real estate, postcards, videos, and so on. Non-fungible tokens cannot be replicated or equated with assets that are similar, as each asset is unique.

In fungible assets, an item or an asset that is exchangeable with a similar item or good is said to be fungible, whereas in non-fungible assets, a token is a distinctive digital asset whose ownership can be followed using a blockchain development like Ethereum.

Here’s an example of a game ticket to help you understand. As a result of giving someone a baseball game ticket, you are obviously going to take that ticket as well. Is that right? Will you accept a movie ticket if that person returns it to you? The answer is no, because a movie ticket is not as valuable as a baseball ticket. Since each baseball game ticket has its own unique identity, the game ticket (which is an NFT) cannot be replaced or traded with any other ticket.

As with NFT, you cannot just exchange or trade NFT tokens with similar value tokens, since each token is unique and has its own rarity and uniqueness.

Non-fungible Tokens Examples

The benefits of owning a digital collectible over a physical collectible, such as a stamp or rare coin, are numerous. In order to verify authenticity of a collectible, each NFT contains distinguishable information that makes it unique.

Since the original item can easily be traced back to the original owner, it makes it useless for artists to circulate fake collectibles.Unlike other NFT cryptocoins, you cannot exchange NFTs directly with anyone since they are non-identical. Despite being part of the same collection or being of the same size and color, two NFCs on the same platform won’t be the same. Here are some examples of NFT projects:

Blockchain Heroes– Crypto and blockchain personalities are portrayed in an original trading card series.

Decentraland. A virtual world owned by the users can be purchased by the players in this game. With shops, advertising, etc., the owner of the virtual space can monetize their world.

Prospectors.io– This is a blockchain-based game, where players earn NFT based on the assets they own.

Read more on EVERYTHING YOU NEED TO KNOW ABOUT MEEBITS NFT COLLECTION

NFT’s History – When and How Did it Begin?

There are some arguments surrounding the first appearance of NFTs. It is believed that colored coins were the first NFTs. On the blockchain, colored coins represent real-world assets.

Colored Coins were mentioned in an early 2012 blog post by Yoni Assia, titled “bitcoin 2.X (aka Colored Bitcoin) – initial specs.” According to Assia, Colored Coins supported experimentation and laid the foundation for NFTs.

Following that, Rare Pepes were traded on Ethereum, and then Crypto Punks was released as the first-ever NFT token.

Rare Bits, a marketplace and exchange portal for NFTs, raised $6 million in investment.NFTs made possible Gamedex, a collectible card game that raised more than $800,000 in its first week. Beeple, a digital artist in America, has launched his work titled “Every day”.”The First 5000 Days” sold for $69 million (42329.453 Ethereum). It is one of the first artworks with NFT to be listed at some of the most prestigious auction houses

Additionally, NBA and Dapper Labs recently launched NBA TopShot Collectible and Tradable NFT-based apps in partnership. This has been in development since 2018 and will be launched in the first half of 2020. As packs, the collectible contains tokens with data and multimedia.

Why NFT Has Surged in Popularity?

Over time, NFTs have been used in a variety of industries, and today they are commonly known as Ethereum Tokens based on ERC-721. Today, NFTs are popular for several reasons:

Due to the secure storage of NFT data on Blockchain, the tokens cannot be removed, destroyed, or replicated in any way.
Scarcity is the main source of value for NFTs. NFT developers can create an infinite number of tokens, but they’re kept limited deliberately to maintain their value.
In contrast to Bitcoins, NFTs cannot be divided into smaller denominations due to their indivisible nature.
By utilizing Blockchain, NFTs can be easily traced back to their real owners, eliminating the need for third parties to verify their ownership.

Fun Fact

Even after exchange, Bitcoin maintains a standard value since it is completely fungible. In contrast to regular cryptocurrencies such as Monero, Ethereum, and Bitcoin, NFTs cannot be exchanged directly.