What is NFT (Non fungible token) | NFTs, Explained

Posted on

What is NFT (Non fungible token):An NFT is a Non-Fungible Token. It is a digital token that is one a kind and is permanently linked to a piece, and it is encrypted with the artist’s signature. This token validates the ownership of the piece and its authenticity. This digital asset is used to represent real-world artifacts. The artifacts can be many artifacts such as art, music, video, and in-game stuff. The NFT’s are bought and sold online with cryptocurrency.

We all have seen radical changes in our country’s economy in the last couple of years. Since the surge of cryptocurrency, the concept of the economy has revolutionised. Money is fungible, meaning that a single rupee can be exchanged for another rupee. But a non-fungible token is not comparable to another one. Each NFT is one-of-kind and has a unique code. 

Non-Fungible Tokens (NFTs) Have Gone Mainstream | IEEE Computer Society
NFT’s Non Fungible Token (source:IEEE Computer Society)

NFT Non fungible Token Exists Over Blockchains?

NFT is an asset that exists on blockchains. However, every token is exclusively unique. The NFT’s incorporate digital artwork. This digital artwork is in images, videos, GIFs, and music. There are various blockchain-backed marketplaces where the NFT’s can be exchanged. Even a provision enables you to buy cryptocurrency with a credit card.

Contact with Our Franchise Consultant

However, you can transfer the NFT from the exchange to your preferred wallet. The NFT’s are a potential investment opportunity for someone as their value may rise in the future.

Who Invested NFT (Non fungible Token)?

NFT’s were invented on 3rd May 2014 by Kevin McCoy. He is known to have created ‘Quantum’, which is a non-fungible token. It is a pixelated image of an octagon that is filled with shapes. Various NFT ledgers claim to provide legitimate proof of ownership.

NFT’s do not restrict the sharing or copying of the underlying digital files. The blockchain can be stored or traded, and the NFT can be associated with a physical asset and a license which is a validation to use the asset for a specified purpose.

NFT functions like cryptographic tokens but may represent a different underlying asset and hence may have a different value.

How To Create NFT?

Is NFT(Non fungible Token) Secure?

This transaction process ensures the authentication of the digital file. This authentication is done by providing a digital signature that tracks the NFT ownership. When you own an NFT, you do not necessarily have the copyright or the intellectual property rights to whatever digital asset the token represents.

There comes the point when the owner wants to sell the NFT, but the main underlying fact is that the buyer does not receive the copyright privileges when the ownership of the NFT is changed. This allows the original owner to create more NFT’s of the same work. Whether an NFT is proof of ownership or copyright is often a dilemma. However, an NFT is proof of ownership which is very different from a copyright. 

NFT(Non fungible Token) Market Trends

The NFT market experienced rapid growth in 2020, and its astounding success bought worldwide attention. The value of NFT’s tripled to $250 Million. More than 200 Million dollars were spent on NFT in the year 2021. The interest in the NFT’s increased in the early months of NFT after several high-profile sales and the art auction.

Why is Non fungible token (NFT) trending?

  1. When a person owns an NFT, it is associated with a license to use the underlying asset. However, it does not confer the copyright to the buyer. Some agreements grant a license for personal and non-commercial use.
  2. There was a sudden surge of the NFT’s in the music industry as of February 2021, and it reportedly generated a sale of around $25 Million. Many artists sold their music as NFT (None Fungible Token)tokens. 
  3. NFT was trending for a variety of reasons. Much of the current market for the NFT’s is centered around digital artwork, rarities, and sports cards. Several fashions, apparel, and luxury brands ventured into the NFT space as they gauged its potential.
  4. Ethereum became the first-ever blockchain supporting the NFT’s ERC-721 standard. This is the most widely used standard. 
  5. After unleashing the potential of NFT, several other blockchains also added or are planning to extend their partnership with NFT owing to its huge potential in the market.
  6. Bitcoin cash – It powers the Juungle NFT (Non Fungible Token) marketplace and supports NFT.
  7. Cardano- It introduced native tokens that enable NFT’s creation without beholding any smart contracts.

Why are the Non fungible tokens important?

  1. The non-fungible tokens are a revolution over the simple concept of cryptocurrencies. 
  2. The modern finance system consists of a loan system for different assets. 
  3. These concepts have become a potent force for change when combined with a tamper-resistant blockchain of various smart contracts.
  4. The most important benefit of NFT is market efficiency.
  5. The NFT’s are excellent for identity management.
  6. We all know how it goes for a person when he is travelling to and fro via a flight. The airport has a system that needs to produce a physical passport at the entry and exit point. 
  7. One can convert the individual passports to NFT’s and streamline jurisdictions’ entry and exit processes.
  8. People from all walks of life have started using NFT’s. They are also used for identity management within the digital realm.

One can also fractionalize the physical assets like real estate. The creation of new markets and forms of the investment is the most exciting possibility of NFT(Non fungible tokens). The Real Estate trading is a very complex affair, and it can be simplified by incorporating relevant metadata into an NFT. 

NFT Non fungible tokens is tangible or intangible assets?

NFT’s represent both the tangible as well as intangible assets. The block chain technology is used for creating the tokens that can be sold and traded as each NFT has a unique digital signature. They can digitally represent any type of asset. NFT’s can also represent the in-game items such as avatars and several domain names and event tickets.

Most of the NFT’s (Non fungible tokens) can only be purchased with Ether and stored in a digital wallet.

These tokens are extremely safe and secure. The NFT’s are impossible to hack.

One underlying risk in this business is that if the platform that hosts the non-fungible token is out of business, you could lose access to your token.

Leave a Reply