You must have heard of Non-Fungible Tokens- NFT, even if you haven’t, you must have heard about crypto kitties that made a huge wave in 2017.
A really simple Explanation of Non-fungible Assets
In simple terms, you know how wristwatches can be of the same model but not worth the same amount depending on who owns it. You might have the same wristwatch as a celebrity but if the celebrity decides to sell his own watch, even though you might have bought it at the same price, the reselling price for the celebrity will definitely be different. What is different? Absolutely nothing, it’s still the same type of watch but the price cannot be the same for so many reasons. Two houses in the same area cannot be worth the same prices for obvious reasons. Asset classes like these are called non-fungible because they cannot be divided and two non-fungible assets of the same type are unequal.
On the other hand, cash or fiat of a particular denomination is the same no matter where it has been or who has it beforehand. A $100 bill will always be the same no matter where you are spending it in the United States and is divisible. This is also true for other fiat currencies so far the are within the jurisdiction where they are accepted. Such is for physical cash that we can see and touch. The matter is slightly different with digital cash, because fiats may be accepted or traded wherever online. So also cryptocurrencies, 1ETH is 1ETH no matter where you get to. The baseline is that they are good examples of fungible assets.
Non-fungible Tokens NFT
Non-Fungible tokens are token smart contracts that are unique and non-divisible just like their non-fungible physical asset counterparts. Each token of the same type is different especially with the mint numbers on them which dictate their worth in most cases. Tokens like these carry metadata which might be arts, lands, names, game characters, etc. with which they are identified in the Dapps where they are used. The best part is, NFTs can be used outside the D’app for which it is created. A crypto art might become an in-game hidden asset for another game if the developer allows its use.
ERC 721 and ERC 1155
Ethereum based NFTs are the most popular and they are of two types: the early ERC 721 and the latter update ERC 1155. ERC 721 allows the creation of NFTs of a single type at once and doesn’t support batch sending. ERC 1155 which was created later enables a single smart contract to contain both fungible and non-fungible token of infinite types at once and also allows batch sending of tokens.
Cool D’apps based on NFTs
The creation of blockchain-based NFTs opened up new possibilities for its applications. Though, the crypto kitties’ bubble busted, there are new and improved applications making good impressions today.
For example, opensea.io marketplace where NFTs of all kinds are traded. The market place serves as a decentralized exchange for all NFTs and many users have made a lot of money just trading them.
Decentraland is a popular crypto game that is based on real estate (lands), names, and wearables. It allows people to own properties online and build structures or even games. It can be seen as a foundation for a new wave of innovative ideas, On Decentralnd, builders, developers, and designers are welcome to play around with the tools on the platform.
Another is Unstoppable Domains, it sees a huge opportunity in having a ‘.crypto’ based domain names, it recently collaborated with Opera to attach an IPFS hosting service to these domains to create a full-fledged decentralized and unstoppable websites. These websites are permanent, unhackable, and uncensored but can only be visited on opera browsers for now. The domain names are NFTs. There are games like crypto zombies where each zombie is of a unique DNA and different characteristics as NFT.
What’s the perceived future for NFTs
Out of different possible futures for NFTs one can only speculate that they may be the solid foundation to asset-backed tokens for their capabilities. Although they might be used for the purpose already it might be mainstream in the future.
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