What is Non-Fungible Token (NFT)?
In the last few years a new kind of blockchain-based token has been gaining popularity.
The name of these tokens are Non-Fungible Tokens or NFTs for short. The use cases for NFTs are still rather limited, but they do have the potential to become mainstream in the future.
NFTs are tokens that are unique, meaning each item is different from every other of its kind. In many ways, this is similar to fungible tokens.
However, NFTs can’t be broken down into smaller value units like fungible assets such as cash or gold bars. NFTs are unique items that can be sold and traded independently.
A smart contract is a way of storing information about an NFT transaction in the blockchain.
A Non-Fungible Token (NFT) is minted by smart contracts, which allow a blockchain to store information about unique digital assets.
Digital art is one of the most popular types of non-fungible tokens (NFT's) we know about. NFT's are digital assets, such as music, courses, photos, drawings, and tweets.
What is the difference between NFTs and Fungible Tokens?
We’re all pretty familiar with the idea of owning things like a home or a car these days.
We can easily transfer ownership to other people, and keep track of ownership records by accessing certain government agencies. When it comes to digital property ownership though, it gets a bit more confusing.
The aim of NFTs is to assign unique digital identifiers to physical objects, which can be stored on the blockchain.
This is cheaper and more secure than a centralized database and it allows for the transfer of ownership rights across a distributed network.
Non-fungible tokens are unique digital items like CryptoKitties, baseball cards and other collectibles. Each one is different from the others.
The concept of non-fungibility is a bit hard to grasp at first. But it’s an essential concept for anyone looking to get involved with blockchain-based games like CryptoKitties. Essentially, what makes NFT exclusive and different from one another (hence why it’s called “non-fungible”) is its unique identity.
Each token—for any platform—carries with it a bit of data that makes it stand apart from the rest; this can be information like name, age, breed, color, or even defects.
It’s similar to how in the real world you have properties that are worth more because they have a specific identifier: whether it be a work of art by a famous artist or historical landmark.
So where will NFTs be used in the future? Most likely, we’ll start to see them used as rewards in gaming and fantasy environments.
As developers start to understand the potential that these tokens have, we might even see them starting to sell digital items, such as booster packs or rare weapons, that have their own scarcity index, like other collectible card games currently use.
In 2023 and beyond, we’ll see a lot of smart contracts that have been tailored specifically for these types of scenarios.
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