What are NFTs?
Non-fungible tokens (NFTs) are a type of blockchain-based digital token representing a unique asset class.
They can be utility tokens, security tokens, or other types of digital assets. As encryption and blockchain technologies continue to evolve, so do the classifications of digital assets. NFTs are distinct from one another and cannot be interchanged. Each NFT has a unique identifier that sets it apart, making it proof of authenticity and ownership in the digital realm.
BTA Guru will explain how NFTs work and analyze their applications in this article.
How do NFTs work?
There are various frameworks for creating and issuing NFTs, but the most prominent one is ERC-721. It is a standard for issuing and trading non-fungible assets on the Ethereum blockchain. A newer and improved standard called ERC-1155 allows a single contract to contain fungible and non-fungible tokens. The standardization of NFT issuance enables a higher level of engagement, benefiting users. Essentially, unique assets can be easily transferred between different applications.
On the BNB Chain, there will be its own standards: BEP-721 and BEP-1155. Similar to other blockchains, your NFT will exist on a specific address. It is important to note that NFTs cannot be copied or transferred without the owner’s permission, including the NFT issuer.
NFTs can be traded in open marketplaces like OpenSea. These marketplaces connect buyers with sellers, and the value of each token is unique. Naturally, NFT prices are subject to changes based on supply and demand in the market.
Why are NFTs becoming increasingly popular?
NFTs have experienced tremendous growth in 2021, which continues into 2022 and 2023, captivating the world. Even prominent media companies have entered the arena by launching their own NFT collections. NFTs serve as digital assets for users to collect and have become valuable assets with a wide range of applications.
They have proven to be investment opportunities and utility tools within games, granting players special abilities.
Community Token and Culture Investing
Platforms like Patreon and Substack have proven that individual creators can enjoy a great lifestyle supported by many loyal fans. Creator tokens take these platforms one step further, creating a new mechanism to incentivize a loyal fan base and monetize content.
Community token
It’s quite common for influencers and individuals to leverage their brands. For example, Michael Jordan’s shoe line now brings in more money each year than he earned during his basketball career. While this is a unique example, individuals, whether they become artists, athletes, writers, or educators, have the ability to leverage their personal brand to create business empires outside of their existing areas of expertise.
Individuals are leading the top five social tokens, accounting for nearly $200 million in fully diluted market value. Community tokens seem to be a trend that will likely grow in the coming years, especially with the development of additional infrastructure such as Collab, Land, and Forte and the upcoming launch of community token platforms like Rally Network.
The Application of NFTs
NFTs can be used by decentralized applications (DApps) to issue unique digital items and encrypted collectibles. These tokens can serve as collector’s items or investment products. Using blockchain to tokenize in-game assets is not new, as many online games already have their own economy. However, using NFTs can potentially solve or mitigate the common inflation problem that many games experience.
In addition to gaming, NFTs can be used to tokenize real-world assets. These NFTs can represent small portions of real-world assets that can be stored and traded as tokens on the blockchain. This helps increase liquidity for many illiquid markets, such as fine arts and real estate.
Furthermore, NFTs have the potential to benefit digital identity by storing identity and ownership data on the blockchain. This increases data privacy and integrity for many people worldwide while enabling easy and trustless transfers of these assets.
Why are NFTs special?
Non-fungible tokens have unique attributes, usually associated with a specific asset. They can prove ownership of digital items, such as game interfaces, through ownership of physical assets.
Other tokens are fungible, like coins or paper money. Fungible tokens are identical; they have the same properties and value when exchanged.
The idea of NFTs as a portfolio
The idea of NFTs as a portfolio has gained wider recognition, catalyzed by RARI liquidity mining and a new understanding of the potential applications of digital ownership through NFTs. There are currently several large categories to take advantage of the growth of NFT Zones:
- Individual collections and NFTs
- Financial products, derivatives, and NFT indices
- Layer-1 and layer-2 platform tokens support NFT-based protocols and projects
- Governance token NFT platform
- Social tokens related to NFTs
- NFT Platform and Infrastructure
Popular projects about NFT applications
Axie Infinity
Axies, Lands, and other in-game items are NFTs currently deployed on Loom Network and will be ported to the platform’s Ronin sidechain to expand the technical infrastructure. Ronin is an application-specific sidechain designed for Axie Infinity and is currently in the testnet.
Watch now: What is Axie Infinity (AXS)? Project and AXS token details
Decentraland
Decentraland is a decentralized virtual reality world where players can own and exchange virtual land plots and in-game NFT items. Cryptovoxels offers a similar experience where players can build, develop, and exchange virtual assets.
Gods Unchained
Gods Unchained is a digital collectible card game in which cards are issued as NFTs on the blockchain. Since each digital card is unique, players can own and trade them with the same level of ownership as if they were physical cards.
My Crypto Heroes
My Crypto Heroes is a multiplayer role-playing game (RPG). Players can level up historical heroes through quests and battles. Heroes and in-game items are released as tokens on the Ethereum blockchain.
Binance Collectibles
Binance Collectibles are released in partnership with Binance and Enjin on special occasions. If you want to own one, follow Binance on Twitter and look for gifts.
Crypto Stamps
Crypto Stamps are issued by the Austrian Post service and connect the digital world to the real world. These stamps are used to transport mail just like any other stamp. They are also saved as digital images on the Ethereum blockchain, making them tradable digital collector’s items.
1 number of popular NFT collections today
Bored Ape Yacht Club
Bored Ape Yacht Club, aka BAYC, is an NFT collection of 10000 NFTs built on the Ethereum network. Each NFT depicts a profile picture of an Ape and is unique.
When holding Bored Ape NFT, users not only own 1 unique NFT but also have access to Bored Ape Yacht Club which have many benefits.
Azuki
Azuki is an NFT collection designed by Chiru Labs, a startup founded by artists and technologists in Los Angeles.
At its core, Azuki is a collection of 10,000 avatar NFTs (PFP NFTs) launched on January 12, 2022. With anime-inspired artwork, Azuki’s distinct look is known as a combination of the 3D action role-playing game The World Ends with You and the stylistic sensibilities of the iconic skateboarding magazine Thrasher.
CryptoPunks
CryptoPunks is one of the earliest NFT collections developed on the Ethereum blockchain.
CryptoPunks consists of 10,000 NFTs launched in June 2017 by the Larva Labs studio; the highlight of CryptoPunks is the pixelated humanoids that have received great attention and interest from the community. By being 1 of the best-selling NFTs and one of the first NFT collections on Ethereum, CryptoPunks is considered one of the most iconic NFTs ever.
The future of NFTs
NFTs are being implemented in in-game and crypto collectibles. For games, NFTs can be used to represent in-game items such as skins. In addition, allow them to be transferred to new games or traded with other players.
Non-fungible tokens add the potential for creating security tokens, and encrypting digital assets as well. If this security token is non-fungible, asset ownership is fully traceable.
The further application of NFTs can be certificate certificates, software licenses, warranties, or birth and death certificates. The smart contract of a Non-fungible token always proves the identity of the recipient or owner. It can be stored in digital wallets for easy access and representation.
Where can users buy NFTs?
You can buy NFTs on popular marketplaces on the current Crypto marketplace, such as OpenSea, SuperRare, Rarible, Binance NFT,…
Are NFTs safe?
The distributed nature of NFTs makes them nearly impossible to hack. However, the only security risk you can lose your NFT is that the NFT storage platform stops working.
What are the ways to monetize NFTs?
Some of the best ways to maximize profits from NFTs include NFT trading, NFT gaming,…
In conclusion
Hope this article helps you to figure out the definition of NFTs and their mechanism, as well as the popular NFTs in the market.
