Non-Fungible Tokens (NFTs) are radically changing ownership and exchange of rare collections, it is a cryptographic token that is recorded on a blockchain and can be used to prove the authenticity, ownership and provenance of anything, physical or non-physical. To understand a Non-fungible token on a blockchain, you need to understand what Blockchain is all about.
Non-fungible goods are irreplaceable, unique, and limited in quantity. These can also be represented on the blockchain via non-fungible tokens (NFTs). NFTs can represent artwork, collectables, memorabilia, and personal data. Other examples are gaming characters, digital identities, and certificates.
Non-fungible simply means that the token cannot be duplicated or swapped for anything else, when someone buys an artwork that is authenticated by an NFT, they are not actually buying the digital asset per se, but rather they are purchasing a digitally authenticated note stating that there is only one owner. Anybody can download a copy of the file or link relating to whatever asset the NFT is tokenising, but only the NFT's owner holds the contract stating their ownership rights. The NFTs declare you as the official owner.
How to Create NFTs
Creating NFTs is not that hard. Let's say you created a digital painting and you want to sell it as an NFT. The first thing to do would be to pick the blockchain you want to sell it on - Ethereum is the most popular one.
Some of the popular ethereum NFT marketplaces are
OpenSea,
Rarible and
Mintable. Most NFTs are built using a consistent standard known as
ERC-721 or ERC-1155 according to a Sept. 2020 article by nonfungible.com These marketplaces are simply an implementation of this standard and add your NFT to the ethereum blockchain.
The next thing is to upload your painting somewhere like google drive or the
interplanetary file system (IPFS) which is a distributed file system. Then you go on some of the marketplaces and create a new NFT where you will need to connect your ethereum wallet (like
Metamask) and fill up some details like the name and description of your work.
To round it up, your NFT needs to be minted. It means to add a block on the ethereum blockchain that says that the NFT you created belongs to your account. This action required modifying the blockchain and thus cost some "gas". Gas is basically the service charge to modify the blockchain. Listing your work on an NFT marketplace is not free, it cost some money.
So after that is done, your ownership of the NFT is added to the blockchain and anybody can verify it, and buy your work.
Non-Fungible Tokens List
Presently NFTs are now gaining attention from the public, but current use cases are limited when compared to their huge potential. In other words, it's in the early stage.
The above lists the top 10 NFT markets worldwide as of May 2, 2021, according to nonfungible.com.
Non-fungible tokens are a key component of a non-sovereign, borderless Web 3.0 economy. It's an innovation that is fairly new and in the years to come, best practices will emerge on what's possible.
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