Here’s Your Deep Dive On Non-Fungible Tokens (NFT)

What are non-fungible tokens?

Better known as NFT, a Non-Fungible Token is a digital concept that is taking the crypto world by storm. Basically, “Non-fungible” implies that it’s unique and can’t be replaced.  NFTs are tokens that represent pieces of digital art. Surprisingly, with NFT art, artists, art collectors and musicians are minting money, and at least one artwork has sold for millions.

Non-fungible tokens are cryptographic assets on the blockchain. They are accompanied by metadata and unique identification codes that differentiate them from one another. Ethereum is favored for trading in Non-fungible tokens. NFTs can be used to epitomize real-world items like artwork and real-estate.

“Tokenizing” the tangible assets of the real-world allows these items to be sold, bought and traded more efficiently. This also reduces the probability of fraud. As of now, CryptoKitties and CryptoPunks are the two most famous NFTs. CryptoKitties was considered as the first use of NFT and it allowed users to trade and sell virtual kittens.

How non-fungible token works?

NFTs came into existence and grabbed the attention when the Ethereum blockchain added support for them as part of a new standard. Most of the NFTs are an integral part of the Ethereum blockchain. Eth is a cryptocurrency, but its blockchain also supports NFTs. What makes these NFTs work differently from, say, an ETH coin is that they store extra information.

Each token has an owner and the information is easily confirmable. NFT can be bought and sold on any Ethereum-based NFT market. The owner is not locked into any platform and doesn’t need anyone to intermediate.

Why are non-fungible tokens popular?

NFTs have a feature that enables you to receive a percentage every time the NFT is sold or changes hands. This ensures that if your work gets super popular and rises in value, you’ll get some of that benefit.

Another reason for Non-fungible token to become popular is it gives you a way to sell work that there otherwise might not be much of a market for.

Some examples of non-fungible tokens

Popular examples of NFTs are:
  • The $3,600 Gucci Ghost
  • A 50-second video by Grimes
  • A video by Beeple
  • Digital animated stickers
  • Shatner-themed trading cards
  • CEO of Twitter, Jack Dorsey’s tokenized version of the first tweet
Other examples of NFTs include –
  • A unique sneaker
  • A unique digital artwork
  • An essay
  • An in-game item

Pros and cons of non-fungible tokens

Pros of NFTs
  • Non-Fungible Token art is available online.
  • Non-Fungible Tokens can simplify transactions, remove intermediaries and create new markets.
  • One of the obvious benefits of buying NFT art is it lets you financially support artists you like.
  • The value of NFT art is locked in blockchain and increases over time.
  • NFTs are designed to give you ownership of the work that can’t be copied.
  • Market efficiency is perhaps, the most obvious benefit of NFTs.
  • NFTs can simplify real estate trading by incorporating relevant metadata into each unique token.
  • It can be a new revenue stream for sports, gaming, technology and art.
Cons of NFTs
  • Unlike cryptocurrency, you can’t exchange crypto art because no two NFTs are the same.
  • Since non-fungible tokens are relatively new and slowly gaining popularity, creating dApps for NFT can be time-consuming and tricky.
  • Much more simplification is required to understand the NFT.

Author: Diksha Khiatani

A writer by day and a reader at night. Emerging from an Engineering background, Diksha is a travel freak and anxious to explore different cultures and religions. Inclined towards the off-beat places, she wishes to uncover the secrets on her Scooty (if possible). She always grabs some time to take a quick nap, listen to music, skating and eat a brownie.

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