What is a non-fungible token (NFT)
That’s the hot new acronym for which everyone is asking. It’s one of the hottest trends in crypto, and with good reason: NFT projects are showing incredible promise.
These things can’t be copied or transferred by anyone except their owner. They define ownership through digital means in a way that we haven’t seen before, and they have lots of use cases! Non-fungible tokens could represent ownership over different kinds of assets including, but not limited to, art, collectibles, real estate or even company shares.
A token that represents something that can be valued differently than others gives buyers an opportunity to purchase a piece of the past, present or future and makes it easier for sellers to get a return on their investment. When demand goes up for these NFT items from different artists, collectors will pay more money because they know there aren't as many around. At that point, we have scarcity built into our tokens, which should lead us toward very interesting marketplace behavior where items appreciate over time — just like physical assets do over time!
The uses of NFTs
NFTs are often compared to rare stamps or baseball cards, but they can be anything. Some use cases might include: for a decentralized game that tracks the ownership of collectible items such as CryptoKitties; for a ticket marketplace to ensure seats at an event aren't double sold; for a real estate tracking system to ensure properties are only owned by one person; as rewards for completing quests in MMORPG games, etc.
Some examples of NFTs are:
• GIFs
• Videos and sports highlights
• Collectibles
• Video game skins or Virtual avatars
• Music
• Designer sneakers
How does an NFT work
NFTs operate like any cryptocurrency and use a blockchain to record transactions. The exception: there’s no need for miners or blocks when transacting in an NFT because ownership can be tracked on the blockchain using cryptography—the signature of each NFT functions as a public ledger of ownership.
However, NFTs are completely unique. Unlike regular cryptocurrencies, there is no way to compare the value of one NFT to another (let alone an entire portfolio), because each has a unique digital signature that proves its authenticity and maintains its value—and due to this, they cannot be exchanged for one another.
For example: An individual piece of art can’t be equated with other pieces in the same museum; no collector would ever put Van Gogh next to Da Vinci just because they’re both famous artists. This makes artwork a form of an “NFT.”
Why NFTs are worth it
A smart contract running on top of a blockchain helps enforce that provenance; if you try to transfer this token onto another account without permission from its rightful owner, the token will refuse to budge—like barring access to your house with an electronic key. Through this same framework, NFTs can also automatically issue digital “certificates” in real time when there’s something important to prove about their physical counterparts (think: diamond verification records).
Some reason why should keep an eye on NFTs:
1. It's a rising and promising market;
2. Rappers and webstars are selling them;
3. They are trending everywhere on the internet;
4. But most important: people can make millions of dollars out of them.
Is the future of crypto trading non-fungible tokens? What do you think?
Is NFT going to skyrocket? But the real question is: when is it going to skyrocket?
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