Hackernoon logoEverything You Wanted To Know About NFTs by@nonamec3po

Everything You Wanted To Know About NFTs

NFT (Non-Fungible Token - non-fungible token) is a record on the blockchain that indicates ownership of a certain digital object. It is based on the same decentralized digital technology that underlies cryptocurrencies such as TON Crystal or SNTVT. NFT tokens allow sellers not only to sell something today but also to make a profit and sell it tomorrow but also a new tool for digital art buying and selling. Three years ago, the entire NFT market was worth no more than $ 42 million, and by 2020 it had grown by 705% to $ 338 million.
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A herd of cartoon cats, a video of LeBron, a digital painting of 5,000 thumbnails - all of this has recently been turned into NFT tokens - a new tool for digital art buying and selling. NFT tokens are a hype topic in the world of cryptocurrencies today: three years ago, the entire NFT market was worth no more than $ 42 million, and by the end of 2020 it had grown by 705% to $ 338 million.

Canadian singer and artist Grimes sold through a crypto auction a collection of digital paintings for almost $ 6 million, which she created with her brother Mac Boucher. Kings of Leon are releasing their new album in NFT form. Terra Virtua is releasing Godzilla vs. Kong NFT to coincide with the film's release.

Despite the fact that there is no actual data for April 2021, the NFT market is undoubtedly growing at a very fast pace. It is enough to count how many tokens were sold in January and February 2021 - more than 150,000 NFT tokens worth $ 310 million - almost five times more than in the entire 2020.

What is NFT?

NFT (Non-Fungible Token - non-fungible token) is a record on the blockchain that indicates ownership of a certain digital object. It is based on the same decentralized digital technology that underlies cryptocurrencies such as TON Crystal or SNTVT. The question arises: what is the difference between cryptocurrencies and NFT tokens?

Cryptocurrencies are fungible, all coins are the same and do not differ in any way. NFT tokens differ from each other, they are unique, therefore they can represent unique things: works of art, personal belongings, rights to real estate, etc. An NFT token cannot be replaced with another NFT token. A $ 10 bill can be replaced with another $ 10 bill.

Since NFT tokens are unique and stored on the blockchain, they are true digital counterparts of real things, in particular works of art. NFT tokens also bring order to the digital world - since digital objects can be endlessly copied, NFT tokens secure ownership of them. The NFT token is a confirmation that the digital file is indeed the original.

By purchasing an NFT, you acquire not only a record of ownership of the asset but also access to the actual asset. These assets can be anything you want. At the moment, these are mostly digital artwork or special digital cards. Some cards are completely virtual goods that exist only on the Internet, and some are supplied in special formats. A small number of NFTs are digital records of ownership of an actual physical object.

When did NFT tokens appear and the whole hype began?

In 2017, CryptoPunks (digital images of 10,000 human and animal characters in 8-bit performance) became the first NFTs on the Ethereum blockchain, then the CryptoKitties game appeared, but now the most valuable CryptoKitties are sold for more than $ 100,000, CryptoPunks - for more than 1 million dollars. Even the creators of CryptoKitties did not expect such an outcome, they were very surprised when their creation sold for $ 1 million.

Today, over 260 (base types) CryptoKitties characters are actively traded, generating over $ 2 million in annual sales.

NFT tokens are also actively used in games with internal purchases. They validate the possession of virtual objects in games. This allows players to transfer items between their accounts. NFT tokens confirm the players' ownership of collectible items within the system.

What's special about NFT tokens?

For the buyer, they provide a reliable certificate of ownership of a digital object that protects the uniqueness and value of the product. The Internet makes it easy to duplicate and counterfeit anything, and without a secure blockchain record of ownership such as an NFT, the object is essentially worthless.

NFT tokens allow sellers not only to sell something today and make a profit but also to continue earning tomorrow. NFT smart contracts can be programmed so that the original creator of the object receives a certain percentage on each resale of the asset, usually from 2.5% to 10%. Passive income opportunity attracts many famous people looking to increase their monthly income.

For example, YouTube star Logan Paul sold his own Pokémon Trainer-style NFT cartoon for $ 5 million. Robert Alice, an artist based in London, sold the NFT for $ 131,250, nearly ten times the estimated price. NFT is all about returning control to artists over their creations.

When you buy an NFT token, you buy a kind of barcode, almost a certificate of authenticity, which serves as proof that a certain version of something in your possession is unique. In fact, this is a new revolutionary art format. However, it should be understood that buying an NFT token does not mean that there will not be an infinite number of copies of this thing on the Internet. They will. By purchasing an NFT, you are buying ownership of a painting or any other digital object.

Why don't people just right-click on the picture and save it to their desktop? It's free. Yes, it is, but as with other collectors, be it baseball cards, rare books, or fine art, having an original is special.

For clarity, there is no visual difference between the original and copied versions.

Instead of a single institution, such as a bank, with a ledger of transactions, the blockchain uses a vast network of computers that are responsible for each other's data. This makes it difficult to completely remove the NFT from the network. But there is a way to trace the origin of the NFT and the history of transactions.

How to buy or sell an NFT token?

First of all, you need to buy a cryptocurrency, for example, Ethereum. This is the very first step you need to take to buy NFT. Once you buy Ethereum, you can find many NFTs on marketplaces (Known Origin, Rarible, OpenSea). NFTs are sold in an auction format (traditional or Dutch) or at a fixed price. On the platform, you place a bid on NFT, and if no one outbids your bid before the end of the auction, you will receive this token.

NFT tokens allow the audience to support a favorite author and give users the right to use digital content. NFT attached digital objects are collectible assets that can rise or fall in value. If a picture is attached to the NFT token, which exists in only one copy, the value will be as high as possible.

How to create an NFT token?

In order to create an NFT, you need to log into the NFT selling platform and download the file. The process of creating an NFT token is called minting. When creating an NFT token, most platforms ask if the file that is uploaded is unique (one of a kind), if there are copies of it, and if it is part of any collection. Once you complete the NFT creation process, trading on the platform will begin. The process of creating an NFT is very simple, maybe even too simple. This is why some people try to sell tweets and even colors. Digital artists can build royalties into their NFTs, even for future sales, which is why many artists see NFTs as promising: they could remove middlemen from the market and open up a new way to make money. Thanks to NFT tokens, artists, musicians, video makers, bloggers can earn money without intermediaries, receiving funds directly from the audience.

Why are NFT tokens talked about in the news now and why is there so much hype around them?

The hype around NFT tokens is a combination of factors. Celebrities like Paul Logan and Elon Musk are shaping the trend around a new topic, pushing it into the spotlight. Sales on NFT platforms are growing at a fast pace, and their volume is increasing every month. Everyone was surprised by the cost of selling works by digital artist Beeple on Christie's platform. The starting price of his virtual collage of photos taken over 5,000 consecutive days was $ 100, but the final price exceeded $ 1 million.

Another prime example of the NFT market being booming is NBA Top Shot, a platform launched in October 2020 to sell videos of high-profile basketball highlights. They are sold in five-card packs and then resold in a thriving aftermarket. Top Shot has already sold about $ 200 million of NFT tokens. For example, Jesse Schwartz bought a 2019 Lebron Moment video for $ 208,000.

Enthusiasts are confident that NFT will soon go beyond art, music, video clips, and memes. One startup allows people to use their NFTs as collateral for loans. The earning opportunities in the NFT world are endless.

Should you buy a pair of NFT tokens?

Whether you're buying fine art or 1982 Mouton Rothschild or CryptoKitties, investing in alternative markets carries more risk. For example, a recent study found that between 1985 and 2018, the contemporary art market posted a 7.5% annualized return. The NFT market is highly speculative and will exhibit wild price swings.

It is difficult to measure the size of the entire NFT market due to the structured tokens. Each NFT is an irreplaceable digital asset. Since there is only one unique NFT, each asset is essentially its own market. While .pdf and other formats can be endlessly copied, there is only one genuine token (although the image or document it represents can be completely duplicated).

The programmatic shortage of NFT tokens is partly driving up prices. The NFT market operates the same deflationary market mechanism as in the case of the BTC shortage - there will be only 21 million coins. A similar situation with tokens occurs in the NFT market but on a much smaller scale. The concept of NFT is not limited to creating digital signatures for works of art, it can be used for anything that is unique.

Free TON and NFT tokens

The first NFT token has already been sold on the Free TON blockchain. Now NFT sub-governance is being formed, which is primarily concerned with gaining the trust of artists, musicians, bloggers, etc. from around the world seeking to sell their creations through the NFT market. The development of priorities and priority actions related to infrastructure, competitions, and partnership collaborations is also underway.

The objectives of NFT sub-governance are:

  • Promote the creation of an infrastructure for Free TON NFT that will attract the world's best software developers, artists, collectors, and other ecosystem members.
  • Attracting new influential people to the project from the NFT space, who will promote the Free TON technology.
  • Support for Free TON NFT standardization.
  • Supporting inventors of any possible NFT use cases (eg on-chain standard variants (GTIN, ISBN)).
  • Supporting the transition of developers, teams, companies, and users from the NFT ecosystems of other blockchains to Free TON

The main tasks of NFT sub-governance:

  • Form a strong jury.
  • Attract new partners and start joint activities to promote NFT in Free TON.
  • Create Twitter and Discord accounts that will cover all NFT events and news in Free TON.
  • Create Airdrops for NFT (in collaboration with similar services and projects).
  • Create an affiliate system to reward community members to recruit new partners.
  • Start promoting the NFT market in Free TON: conducting advertising campaigns, events, contests.
  • Create a movement of ambassadors to promote NFT in Free TON (separately in each country).

NFT sub-governance is carefully working out a strategy for promoting the NFT market on the Free TON platform. Participants are actively discussing promotion ideas, active discussions are underway. In fact, NFT sub-governance is made up of the best professionals who are very familiar with this market. You can be confident that the NFT sub-governance will make the Free TON blockchain the main trading venue for NFT tokens in the near future.

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