What is NFT token?
One term in blockchain technology that may not be so popular is NFT or non-fungible token, what is NTF token?
Non-fungible token (NFT), some people call it crypto collectible. Unlike most cryptocurrencies where all tokens are created equally, each NFT is unique and limited in number.
NFT is one of the main developing blocks of the new blockchain-powered digital economy. Several projects are experimenting with NFT for various uses, such as games, digital identity, licenses, certificates, and fine arts. In fact, this technology even allows fractional ownership of high-value goods.
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Non-fungible token (NFT) explained
What is NFT token? If a token can be exchanged, this means that the token can be replaced with something similar. And this can be exchanged easily. In the real-world we can take an example of something that can be exchanged is a grain of rice or a $ 2 in your pocket. If you lend 2$ flat money to someone, it doesn’t matter if the person returns the money but not use the same paper money.
This is the basic difference between fungible and non-fungible conditions. Although the two objects are at a glance the same, each object has unique information or features that make it irreplaceable or impossible to exchange.
Non-fungible in a physical example is airline tickets. Obviously, airline tickets look similar to each other. But each ticket contains a different passenger name, destination, departure time, and seat number.
Swapping your property with other people has serious consequences, not only can you be thousands of kilometers away from your destination, but airport security will take it seriously.
Referring to these conditions, that NTF token is not like cryptocurrency in general. But it has its own uniqueness that distinguishes and can not be replaced by others.
So Non-fungible token (NFT) is a type of cryptographic token on the blockchain that represents a unique asset. This can be a digital asset or a token version of a real-world asset. Because NFT cannot be exchanged, these properties can serve as proof of authenticity and ownership in a digital environment.
How does NFT work?
There are actually a variety of frameworks for creating and launching NFT. But the most prominent of all is ERC-721. This is the standard for making and trading non-functional assets on the Ethereum blockchain.
While the newer and better standard is ERC-1155, which allows one contract to contain both functional and non-functional tokens. This opens up new possibilities. NFT issuance standardization results in a higher level of interoperability. So that it will ultimately benefit the user. This means that unique assets can be transferred to different applications with relative ease.
To save NFT, you can do it in Trust Wallet. Just like other blockchain tokens, your NFT will have one address. It should be noted that NFT cannot be replicated or transferred without the permission of the owner – even by the creator of NFT itself.
NFT can be traded on open markets like OpenSea. This market connects buyers and sellers, with the prices of each different token. The NFT price is also the same as other digital assets that will change in response to supply and market demand.
But how can these goods have value? Just like other valuables, their value is not inherent in the object itself but rather is determined by those who consider it valuable. Basically, value is a belief, whether it’s fiat money, precious metals, or vehicles – these objects have value because people believe so.
This is why each item is valuable and is no different from digital goods.
ERC-1155 vs ERC-721
What distinguishes between ERC-1155 and ERC-721, here are some basic differences between the two.
- ERC-721 can only be used for Non-fungible.
- ERC-1155: can be used on both Fungibles and Non-Fungibles. This also allows the concept of semi-fungible tokens. for example, it is commensurate and can be “transmitted” to non-fungible or vice versa.
- ERC-721: Supports batch transfers only one token at a time.
- ERC-1155: can transfer batches of many token IDs in one transaction.
- ERC-721: Requires lots of new smart contracts for each new token type.
- ERC-1155: More economical because it can be used in a single smart contract for unlimited types of tokens.
Token ERC-1155 cannot be locked even if accidentally in a contract that does not support ERC-1155. So you can only send tokens to contracts that support ERC-1155! The token will be returned if you send a token that is not ERC-1155.
- ERC-1155 can trigger a series of functions and events on the blockchain when sending to smart contracts. For example, exchanges can directly send tokens and exchange to other tokens by atomic, direct, on-chain manner.
- ERC-721 cannot perform this method, because it supports unsecured transfers.
- ERC-1155: Supports universal tokens with localization for all metadata, such as token names, descriptions, or even token images.
- ERC-721: Only supports 1 language.
- RC-1155: supports an unlimited number of URI tokens without storing any additional data in the chain. It can also be used to point to web services that dynamically host JSON tokens for each token in the database.
- ERC-721: Only supports static metadata, meaning token IDs must have URI metadata stored and managed by smart contracts.
What are the uses of NFT?
The function of NFT is that it can be used for decentralized applications (DApps) with the aim of creating unique digital goods and crypto collectible. Even these NFT tokens can be collections, investment products, or others.
You surely know that games are nothing new, many online games have their own tokens. They use the blockchain to name game assets. But this also has a weakness because the use of NFT has the potential to solve or reduce the common inflation problem in many games.
Apart from developing NFT for games, Another interesting use of NFT is the tokenization of real-world assets. This NFT can represent several real-world assets that can be stored and traded as tokens on the blockchain.
With this process, it can add liquidity to many types of markets, such as the art market, real estate, rare goods, and others. Besides that, NFT can also be used as a digital identity, so it can store identification and ownership data on the blockchain and this can increase data privacy and integrity.
One more thing is the easy and trustless delivery of these assets to reduce friction in the global economy.
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Why is the NFT token different from other tokens?
NFT tokens offer unique characters that make them digitally different. Many tokens and even cryptocurrency can be calculated. If you send a Bitcoin and get Bitcoin back, you won’t realize the difference.
In many ways, tokens that can be calculated are built using a standard called ERC-20. Let’s imagine each token is a $ 10 bill. If you send a token to someone and get it back one week later, the token will be similar (even though there will be price fluctuations).
This all changes with the NFT token, which is mostly based on ERC-721. If you accidentally send one of these tokens, then get a different ERC-721 token, you will be very disappointed.
There are other more important differences. Like cash, where you can bid with a $ 10 bill and get a changing.
The CryptoKitties and Ethereum NFT project
For gamers, they may already be very familiar with CryptoKitties. This is one of the first NFT projects to attract a lot of attention. Cryptokitties is a game built on the Ethereum blockchain network that allows players to collect, breed, and trade virtual cats.
In this game, each CryptoKitty has several different properties, from age, type, and color. Each item has unique characteristics, and cannot be exchanged. Also, one unit cannot be divided, so it cannot divide a CryptoKitty token into smaller parts.
The popularity of Cryptokitties increased in February 2020, in the number of daily transactions on the Ethereum blockchain. On the Ethereum network, the impact of this game is huge, besides the Initial Coin Offering (ICO) explosion factor.
CryptoKitties game is an example of using blockchain which is not a currency but as entertainment. But Collectively, these virtual cats move millions of dollars, and there are several rare units for hundreds of thousands of dollars each.
In this case, CrytoKitties replicates this concept in the crypto world, with digital genetic material each cat stored on the blockchain. It’s can buy and sell using Ethereum.
Popular projects that use NFT and best crypto collectibles
The development of NFT in various projects as goods that can be collected and traded is increasing. Some of the most popular lists of non-fungible tokens NFT-based projects NFT games are as follows.
Decentraland is a decentralized virtual game where players can own and exchange virtual land and NFT. A similar game with Decentraland is Cryptovoxels which has a similar concept where players can build, develop, and exchange virtual properties.
Gods Unchained game
This is a digital card game where cards are issued as NFT on the blockchain. Each digital card is unique, players can own and trade it with the same level of ownership as a physical card.
My Crypto Heroes game
This is a role-playing game (RPG) with many players, each player can increase the level of heroism through search and battle. Heroes and items in the game My crypto heroes are issued as tokens on the Ethereum blockchain.
This is issued by the Austrian Postal Service. This to connecting the digital world to the real world. This stamp is used to send letters like other stamps. However, these stamps can be stored as digital images on the Ethereum blockchain, and make them digital collectible items that can be traded.
This is a collaboration between Binance and Enjin for special events. Maybe you are interested in participating in this collectible NFT Binance giveaway, the steps are as follows.
- Follow the Binance Twitter account.
- Create a wallet that supports Ethereum, such as Trust Wallet.
- Copy your Ethereum address and prepare it according to giveaway rules.
- Maybe you should submit it via the form or write it in the Twitter comment column. Check all the rules, so you know what needs to be done to win the giveaway.
- If you win you will see NFT under the Collectibles tab in the Trust Wallet.
- From there, you can choose to HODL, or sell on P2P markets like OpenSea.
Non-fungible tokens use cases
There are non-fungible tokens use cases more than 30 use cases for tokens that cannot be exchanged in the real world including the following:
- Game industry: The use of non-fungible tokens in games has been adopted by several game developers. In the game, for example, you buy a sword. With the NFT can provide proof of ownership for each item in a blockchain supported game.
- Academic credentials: With the blockchain and NFT systems, it can be applied to make a diploma that cannot be replaced, and is trusted to completely reduce friction.
- Tickets: Using the NFT blockchain for purchasing football tickets or watching movies could be a new system that could be implemented.
- Supply chain: It is also possible to use NFT tokens to avoid goods fraud. NFT can help as a tracking mechanism on the blockchain in providing supply chains to consumers.
- Art. NFT can be applied to art. Artists who use digital images will be helped by using NFT tokens and can protect their copyrights. Through the NFT, artists can exhibit it in a virtual space, with a blockchain that offers proof of ownership. It can even get bigger payments or get a portion of the remaining profit from future sales, to create a recurring income stream.
The current use of NFT is mostly for games and entertainment, but technology continues to grow, in the future, it is possible that the use of NFT will penetrate the wider economic world.
Digital collection has brought blockchain technology into something new outside conventional financial applications. The potential use of NFT can cover a wider market, only how this technology developer is able to compete and develop products that are widely accepted by the public.
But to be able to expand its application in everyday life, this technology still has to struggle hard and may take a long time.
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