An Introduction to NFTs
What are NFTs?
A non-fungible token or NFT is an exclusive type of cryptographic token that is non-interchangeable due to their individual identity. These unique attributes create verifiable digital scarcity, meaning it is impossible for the tokens to be exchanged or replaced.
Why use NFTs?
Digital scarcity is a feature of being ERC-721 compliant and developers are seeing this token type becoming more widely adopted in the dapps gaming sector, where NFTs are used to represent characters or items.
An example of this is Etheremon. Each function is a separate NFT token meaning players can trade the feature but not share it. Whenever a new Etheremon is created, the Ethereum network becomes populated with a fresh NFT token and ownership is exclusive to the individual that requested the act.
When are NFTs being used?
ERC-721 allows tokens to be manifested into collectibles, which opens the possibilities of consumption further still. Think of Art where proof of origin and ownership (also known as provenance) are essential for establishing authenticity and for ruling out if the piece is a forgery, a reproduction, stolen or looted art. Digital artists are using ERC-721 for this very reason, knowing the full history of information on the asset is traceable and verifiable.
If you have been following world events of late, you’ll probably feel like the world is under siege. There is some much information throughout the ever-expanding media streams, it is difficult to differentiate real from fake news. One avenue that is currently being explored by the media industry is the adoption of NFTs through digital provenance to eliminate fake news.
There are further cases where ERC-721 allows provenance identification and certification. The use of blockchain technology ensures that digital data can be verified and stored securely. This can be used for storing medical records, combating counterfeiting in sports ticketing and is even being explored by the real estate sector. There are more obvious cases that spring to mind when you think of NFTs. Collectible items in the gaming or sports sectors such as characters or collectible sports cards.
You are probably already familiar with NFTs without even realizing it, remember 2017 and CryptoKitties? The CryptoKitties mania at the peak of the cryptocurrency bull market sent the transactions on the Ethereum network skyrocketing, amounting to over 12,000 transactions. This was largely due to the “birthing fee” for kittens.
With consideration of the above, it is not difficult to appreciate why NFTs are beginning to trend more strongly. Although the current adoption is still not widespread, time can move fast in the digital world. Non-fungible tokens appear to be setting out a solid foundation for further growth, so it is a subject that is worth keeping informed upon.
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