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Definition of Non-Fungible Token (NFT) and the way it works
The term NFT has become a hot topic of discussion in many technology groups and has flooded the Internet. Based on blockchain technology, everything from game items, paintings, and music to tweets can be traded as NFT on online auction sites. So what is the definition of Non-Fungible Token yet? Why does NFT have such potential? Is NFT a long-term trend? Let’s find out in this article!
First of all, let’s dive into the definition of Non-Fungible Token (NFT). NFT is one of the 5 main types of cryptocurrency tokens. NFT is a type of digital asset present on a digital chain (blockchain), that is, a record of transactions on a networked computer. The chain of numbers acts as a shared ledger, allowing anyone to verify the authenticity of the NFT and the owner.
Unlike other infinitely reproducible digital objects, each NFT has a unique digital signature, marking its uniqueness. They are usually purchased with virtual currency or in USD. Then the sequence of numbers will record the transaction.
NFT has been trading since circa 2017. It started gaining attention in early 2021 before exploding around August 2021. According to data from market tracking company DappRadar, sales grew to $10.7 billion in the third quarter of 2021.
NFT is most typically used in digital content such as music, photographs, and other forms of art. When an artist sells a painting as NFT, for example, the buyer must pay and become the owner of the painting. Others can still see the painting, but the buyer is the only one who has legal ownership. NFTs can also be pieces of land in virtual world environments, a digital garment, or the right to use a proprietary cryptocurrency wallet. In March 2021, the first Twitter post of Twitter owner Jack Dorsey sold for $2.9 million as an NFT. NFT has endless potential because it may be found in a variety of digital artefacts, including photographs, videos, music, text, and even tweets. NFTs can also take the form of virtual land, a digital garment, or the ability to utilize a proprietary cryptocurrency wallet.
So what are the benefits that NFT brings? The tokenization of assets can bring significant benefits to both sellers and buyers. Because NFT assets can verify the authenticity and clear ownership, transactions are also transparent, especially with artworks where authenticity is important in determining value. Sellers themselves can also protect their intellectual property rights and enjoy the fruits of their labour more fairly. Or like in the game world, if you buy items and characters in the form of NFT, then you are the 100% exclusive owner of it, no one can trespass. Not even the game publisher can delete your character or items.
When you know the definition of Non-Fungible Token and the basic concept of this token, things will get easier when you want to buy NFT. To begin, you’ll need a digital wallet that can hold both NFTs and cryptocurrencies. Depending on what currencies your NFT provider takes, you’ll probably need to buy some cryptocurrency, such as Ether. Coinbase, Kraken, eToro, and even PayPal and Robinhood now allow you to buy cryptocurrency with a credit card. After that, you’ll be able to transfer it from the exchange to your preferred wallet.
Here is the list of popular NFT Marketplace
• OpenSea.io: This peer-to-peer marketplace claims to sell “rare digital objects and treasures.” To get started, simply create an account and browse the NFT collections. You may also sort pieces by how much they sold to find new artists.
• Rarible: Rarible is a democratic, open marketplace that lets artists and producers issue and sells NFTs, similar to OpenSea. The platform’s RARI tokens allow users to vote on features such as fees and community regulations.
• Foundation: To upload their work here, artists must acquire “upvotes” or an invitation from other creators. Because of the community’s exclusivity and high admission cost—artists must also acquire “gas” to mint NFTs—it is likely to attract higher-quality work. Chris Torres, the developer of Nyan Cat, for example, sold the NFT on the Foundation platform. It might also mean higher prices, which isn’t necessarily a bad thing for artists and collectors looking to profit if demand for NFTs stays the same or even rises over time.
Although these and other platforms are home to hundreds of NFT artists and collectors, do your homework before purchasing. Some artists have been defrauded by impersonators who have listed and sold their work without their knowledge. Furthermore, the verification methods for creators and NFT listings vary by platform, with some being more strict than others. For NFT listings, OpenSea and Rarible, for example, do not require owner verification.
Many see the NFT as the future of property ownership. They believe that every type of property, from event tickets to houses, will eventually tokenize ownership this way. However, there are still many risks when investing in NFT. Like virtual currencies, the NFT remains unregulated. Anyone can create and sell NFT assets and there is no guarantee of their value. In a market where so many participants use nicknames, fraud is also a big risk.
Hope this article will not only help you understand the definition of Non-Fungible Token but also provide the overall knowledge that you will need when enter this market. Besides, Pando Infinity offer any blockchain or NFT development service you may need, include:
We are highly experienced in the latest technology advancements and ready to provide you with cutting-edge NFT development services. Feel free to contact and reach out for our NFT token development services!