What is an NFT? All You Need to Know About Non-Fungible Tokens

What is an NFT? All You Need to Know About Non-Fungible Tokens

Today we’re talking about non-fungible tokens (NFTs), unique tokens issued on the blockchain that can represent anything from real estate to stocks to collectible items like Cryptokitties. So, what exactly is an NFT? How do they differ from other kinds of tokens? What’s the difference between an ERC-721 and an ERC-20 token? Let’s get started!

What is an NFT?

People had no idea what NFTs were before 2021, but now they have taken the world by storm! Non-fungible tokens are called NFTs. NFTs are cryptocurrencies representing a unique metadata set that cannot be exchanged or backed by blockchain technology. NFTs are digital representations of cryptographic assets. Non-fungible tokens are cryptographically verifiable, easily transferable, and unique or scarce. 

The unique nature of NFTs prevents them from being interchangeable. Non-fungible tokens can represent any asset, including online-only assets such as digital artwork and tangible assets such as real estate. An NFT is impossible to copy or steal, so there is little to no chance of fraud.  

How Are Non-Fungible Tokens Created?

Minting is the process by which artists, creators, or license holders create NFTs. The process begins with a blockchain transaction that outlines all the basic token details, which triggers a smart contract to build the token and assign it to its owner. 

How do NFTs work?

NFTs utilize the blockchain to allow users to own digital and tangible assets. You can, for example, get proof of ownership backed by blockchain technology if you convert your game items into an NFT. As a result, when you list your NFT on a marketplace, you pay a fee for using the blockchain, which records your digital art, thereby granting full ownership of the NFT. When given complete ownership of your NFT, no one else can modify it, including the marketplace owner.

What’s the difference between an ERC-721 and an ERC-20 token?

ERC20 tokens have the primary distinction of being fungible, while ERC721 tokens are non-fungible. ER20 tokens are interchangeable and represent a single entity, while ERC721 tokens represent a collection of assets. They are also not divisible.

What are NFTs used for?

Art 

NFTs can serve as collectible art pieces. In addition to ensuring ownership rights, non-fungible tokens allow artists to sell their art globally. 

Academic Credentials

Academia can use non-fungible tokens to store all the proof of academic credentials and other important information that is not changeable on the NFT chain. 

Access Passes

Due to their ease of authentication and ability to verify ownership, non-fungible tokens can act as access passes. Flyfish Club, a private dining club for members only, already uses NFTs to provide members exclusive access. 

NFTs Can Help Businesses Streamline the Supply Chain Process

Businesses can also track their products throughout the supply chain process using NFTs, which enables enterprises to maintain transparency in their supply chains.

Medical Records and Identity Verification

Healthcare professionals use NFTs to store their medical records securely. NFT transactions validate on multiple nodes before inclusion on the blockchain. The records are therefore reliable and secure.

Domain Name Ownership

Using blockchain technology, domain owners can control their domains using private keys. They can also customize domain names using blockchain NFTs.  

Gaming

For games, NFTs are used for in-game items, collectibles, and avatars, creating limited edition certifications for owners of these digital goods.

shutterstock_1995945302.jpg

How Can You Buy an NFT?

NFTs sell in various ways, including private sales, traditional auction houses, and online marketplaces. 

Where do I store an NFT?

There are several different ways to store an NFT. The most popular option currently is Ethereum’s blockchain, with ERC721 and other standards soon appearing on Bitcoin. In addition, some third-party wallets and marketplaces allow you to store NFTs; for example, Cryptokitties stored in a MEW or Coinbase Wallet. Another popular option is Metamask or a Non-Custodial Wallet like Trust or Rainbow Wallet. Many people also prefer the added security of a hardware cold storage wallet like a Ledger Nano X or Trezor device.

How to Evaluate an NFT Project?

Rather than relying on how the project appears, evaluating all aspects of NFTs beforehand is wise. It is essential to assess the founding team's credibility, its ability to deliver, and the project's roadmap. Understanding these elements will help you make more informed decisions because you've done your research.

Looking for A Reliable Platform to Display NFTs and Verify Your Web 3.0 Identity? 

NotCommon provides a platform to quickly verify your NFT identity and display multiple NFT galleries from different blockchains in one easy-to-manage profile. The platform provides a fun and interactive way to communicate with others while discovering all types of digital collectibles.

We hope you'll join our growing community. 

You can also join our Discord community to learn more.