Last Updated on February 11, 2022
In this new era of digitalization digital assets are the most appealing investment avenues and with the rise of digital money like Bitcoin, Ethereum, Binance, etc. a brand new digital exchange eco-system come into existence. People start using virtually created tokens or NFT to use as a medium of exchange for utilities available at the digital platforms. These tokens become very popular with the evolution of cryptography and block-chain based technology. These tokens can be used to convert items that are unique in nature into a digital identity.
Lets find out more.
What NFT mean?
Non-Fungible means those items that are unique in nature and cannot be exchanged for other identical items that possess the same monetary value. Some of the examples are a piece of art, an artifact, collectibles, digital art, physical assets, etc.
NFT are the Non-Fungible Tokens that are digitally created with the help of block-chain technology to provide a unique digital identity to a particularly unique item. These NFTs belong to a sole owner and can be traded in exchange for a monetary value.
Block-chain technology is used to provide a unique identity to the owners of these digital tokens every time the ownership is transferred to another person. This unique digital identity becomes a public record that can be easily verifiable.
This provides a common standard by using block-chain so, that these tokens can be interchangeable with any other token created using the same technology.
NFT is first created and used by Kevin McCoy by the name “Quantum” in 2014. After that in 2014, the Bitcoin block-chain was used to create tradable digital tokens and decentralized exchange for these tokens. In 2015, the first Initial Coin Offering (ICO) was launched and in the same year, the first NFT project named “Etheria” was introduced.
NFT can be used in various digital ecosystems, platforms, and virtually created worlds. All these interchangeability can be done through the internet via electronic media.
These digital tokens have high liquidity as these tokens can be traded in the open market with the facility to buy and sell in any type of currency i.e. digital or fiat. The commonly used block-chain technology for producing Non-Fungible Tokens is Ethereum Block-chain. ERC721 was the initial standard established to represent Non-Fungible Tokens.
In 2017, ERC721 standards were introduced along with it CryptoPunks, RerePepes, Dentraland, CryptoKitties projects also come into existence. In 2018, the term NFT is used to refer to these digital tokens.
There are numerous things that fall under the Non-Fungible Tokens list. Let’s put light on one of the things i.e digital art.
NFT Digital Art
Digital art is the most preferred item that is used to convert into Non-Fungible Tokens. This art consists of Graphics Interchange Format (GIF), collectible items, songs/music files, videos, logos, and so on.
Platforms like Digital Art Chain, Marble Cards, Mintbase, Mintable, and OpenSea are some of the platforms that allow users to create digital arts into NFT tokens.
These tokens can be bought and sold on different platforms on the internet namely OpenSea, Arkane, SuperRare, Foundation, etc.
Apart from that NFT can be used to represent unique physical assets. These assets consist of documents, deeds, signatures, event tickets, and almost anything that has unique characteristics and is not interchangeable with identical items.
Also, there are games that are developed by embedding digital technologies that will not only provide an interactive experience but also opportunities to earn while playing.
Check out below!
Games are the means of entertainment and a display of creativeness. Games connect people to the digital world through user engagement. Playing games gives us joy and a sense of accomplishment.
With the innovation of block-chain technologies, new games based on block-chains embedded programs came into existence. Many of the games already provide in-game Non-Fungible Tokens in the form of game money which is used by the players and users to purchase game items and various in-game utilities.
By embedding block-chain in-game programs developers provide users not only to play and earn in-game tokens but they bridge the way to monetize those in-game utility tokens.
Creative games develop digital tokens in the form of crypto-currencies like Axie Infinity (ASX), Gods Unchained (GODS), Splintershards (SPS), The Sandbox (SAND), Decentraland (MANA), etc., which are listed on crypto-exchanges.
Also, unique game characters and in-game items can be traded by the players in the NFT market. This game model is known as play-to-earn. These games not only provide a good gaming experience but also an opportunity to earn through gaming.
This new age earning opportunity attracts a large number of investors that increasing the popularity of these digital tokens.
A look-over investment element in Non-Fungible Tokens might give us some insight.
Let’s find out!
Digital artists and investors see Non-Fungible Tokens as a recently growing investment avenue besides crypto-currency. Due to block-chain technology, each NFT has a unique identity which provides a great advantage to the digital artists to validate and monopolize their ownership of a particular creation.
The creators are able to control the supply of that particular NFT and owners receive royalties when sold. Also, NFTs can be of distinct types i.e. digital arts, game items, logos, domain names, tangible assets, and the possibilities are yet to discover which makes these digital tokens a potential investment option. NFT value grows with more exposure it gains. Although, the demand and supply can be manipulated as there is no responsible authority to intervene and there is a risk of theft by hackers.
In the end, digital assets and NFTs are the future of investment. These are very recent and in the developing stage. With the new innovation of digital technologies, demand for NFTs will increase.
Although each investment avenue has its own risk factors. So, if anyone is willing to invest should understand the characteristics of the investment and perform research before entering into the NFT domain.
What are your thoughts on NFTs?
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He is graduate in M.B.A Finance, and owner of the financial blog “Saifwealth.com“. He started this blog to share his knowdelge in the field of finance and to help people understand and aware about the financial world.
1 thought on “NFT (Non-Fungible Tokens)”
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