Non-Fungible Token (NFT): Minimum Words — Maximum Information
Blockchain technology has had tons of revolutionary innovations within the short period that it has existed. It has given rise to one of the most profitable assets, i.e., cryptocurrencies, that have entirely changed how people invest money.
The real revolution occurred in 2021 when the NFT (Non-Fungible Token) frenzy gripped the world. Almost all of the digital spaces were covered by NFT news and everyone, from celebrities to businesses, started getting into NFTs.
While the frenzy might have died down as the global and crypto markets saw a downside, the space is on its way to becoming bigger and better. So, in this article, we bring you everything you need to know about Non-Fungible Tokens.
What Does NFT Mean?
NFT is an acronym for Non-Fungible Token, a digital asset on the blockchain with a unique identification code that can not be exchanged for other NFTs. They are also a token like cryptocurrencies, but the difference is that cryptocurrencies can be exchanged for one another, but NFTs can’t be, i.e., non-fungible.
While people mainly associate them with digital artwork, they can also be used to monetize and tokenize real-world assets such as real estate, cars, data, etc. Ownership of NFTs of real-world assets gives ownership rights and can also be traded easily.
They work through a process called minting, which creates a new NFT that makes a new block on the blockchain. The block contains all the information, including its metadata, ownership information (the wallet address), information about its transferability, etc. The use of intelligent contracts does the minting process.
Most NFTs are minted on the Ethereum blockchain and are ERC-721 tokens. They are assigned a unique identifier, and even if they belong to a collection of thousands of NFTs, each one is unique from another. The information about the NFTs is available publicly on the blockchain.
Who Uses NFT and Why?
It is easy to dismiss NFTs as pictures and jpegs that exist on the blockchain. But they are used for many purposes by various people, industries, and businesses. For example, digital content creators use them to monetize and connect with their audience directly.
The gaming industry also uses NFTs extensively, as any in-game items, like the avatar, accessories, etc., can be turned into a collectible item that can be sold and purchased. Moreover, you can easily secure a DeFi loan by using NFTs as collateral. On top of that, every industry can turn its products into NFTs and make it possible for users to buy, sell or trade them easily.
Examples of NFT
Though the frenzy about them has come down in the past year, there is some news NFT has become an integral part of that you read. Some of the most popular examples of NFT projects are
- Bored Ape Yacht Club. The project by Yuga Labs racked up more than $1.5 billion in sales in 2022, and some of the most prominent celebrities also bought them.
- Mutant Ape Yacht Club. Another project by Yuga Labs purchased more than $1.1 billion in sales. Their holders got an airdrop of the Apecoin tokens as well.
- Othersid.: The metaverse gameplay project by Yuga Labs had more than $61 million in sales within 24 hours of its launch.
- Azuki. An anime-inspired project that earned more than $850 million in 2022.
- CryptoPunks. The images, mostly used as display pictures since 2017, raked in more than $575 million and underwent upgrades after the acquisition by Yuga Labs.
Non-fungible tokens are one of the innovations that blockchain technology was looking for to get viral and find widespread usage and adoption. As corporations pivot toward a virtual metaverse, they will use NFT technology to make the user experience more profitable and immersive.
Hence, the slow pace since hitting its peak is the calm before NFTs find mainstream acceptance and use cases across all industries. And if history is any indicator, a bearish phase is the best time to invest in an asset, including NFTs.