We are currently witnessing a rising tide of NFT trade. Experts say that the sharp rise in the NFTs market occurred last year and now it continues to grow, some digital assets sell for millions of dollars. Definitely, NTFs are the new big trend in the crypto ecosystem.
What is an NFT? Its difference from cryptos
Non-fungible tokens, or NFTs, are a digital asset that represents digital or real-world objects like photos, videos, art, music, in-game items, etc. They are cryptographic tokens that are used to create unique identification and verify ownership. It is built using the same programming method as cryptocurrency, but there are fundamental differences.
Cryptocurrencies as usual physical money can be exchanged for one another. One dollar is equal to another dollar and each one Bitcoin worth another one Bitcoin. If you trade one for another Bitcoin or one for another Ethereum, you get exactly the same asset.
It’s different with NFTs. "Non-fungible" means that a token cannot be interchanged by any other, because it's unique and has no equal. Every non-fungible token has unique attributes that distinguish it from others, so each individual NTF is an inimitable thing.
You can often find the statement that NFTs create digital content scarcity. An artificial cut of release with existing demand should increase the value of this asset. An example is a digital project CryptoPunks. There were issued just 10000 unique collectible characters characters in 2017, now the cost of some of them reached several million dollars.
How do NFTs work?
Non-fungible tokens cannot be interchanged but they can be bought or sold, and they are traded online.
NFTs exist on a blockchain, which is a distributed public ledger that records transactions.
Traditionally NFTs are held on the Ethereum chain, "a community-oriented platform that produces limited edition authenticated NFTs (aNFTs) and trading cards”. But other blockchains support them as well.
If you have a crypto wallet you can buy NFTs. The rapidly growing popularity and the total value of non-fungible tokens have led to the emergence of a large number of marketplaces. 5 the largest DeFi platforms for operations with NFTs:
OpenSea.io
Rarible
Foundation
SuperRare
Nifty Gateway
Where NTFs are used?
NF-tokenization is making things more interesting in the DeFi ecosystem. Currently, there are several areas NFTs do well in DeFi. Some of them:
Digital art. One of the biggest challenges for digital content creators is copyright protection. NFTs solve the problem. In turn, DeFi gives artists the opportunity to earn money.
Collectibles. Existing platforms use NFTs to create tokenized versions of content related to celebrities or sports stars. The growing popularity of NFTs makes traditional collectors’ items like baseball cards, coins, and stamps to be upgraded in order to fit in the new time.
Gaming. New opportunities for users are created. Ntfs can guarantee certain ownership to in-game assets. DiFi allows players to monetize their efforts.
Identity. Digitalization personal and unique attributes such as appearances, professional and academic qualifications, awards, achievements, etc.
Expectations and perspectives
General expectations from non-fungible tokens lie in the possibility of the creation of new markets and forms of investment. They continue to find applications in DeFi segments. It is quite clear that the NF-tokenization process will grow up and widen.
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