Why are we all so entitled to the Blockchain industry? For the high development pace? Of course. For the number of appearing opportunities, growing like a weed under the sun and rain? Surely. For building up an alternative financial and tech sphere? You name it.
Trends in Blockchain switch one another and each trend leaves us with a new reliable product that is implemented into the whole industry as it was there for the whole time. What is coming next? What should we expect next? As you might have heard NON-FUNGIBLE Tokens are on the way. So, what is it and how NFT can change the world?
As I get more and more clients that are issuing NFTs, I decided to write about it for more people to undesrtand how it works.
Let’s go from the top. Non-fungible tokens (NFT) are a type of cryptographic tokens that standalone. Speaking in other words, non-fungible tokens are not interchangeable by their individual specification in the way that crypto-assets such as Bitcoin is. Non-fungible tokens can be used to create verifiable digital scarcity.
NFTs can be useful for industries that require some kind of unique items, let’s say for identification of the piece of art or any other unique achievements of a user.
If you have two bitcoins on different wallets those would be completely the same. If you swap them nothing would change.
Two NFTs are not equal to each other or any third NFT even in their inner value or token specificity individually. The distinction lays in the hash that assigned to each separate Non-fungible token. If we turn this whole construction around we would see that basing on token provenance we can determine it and distinguish from tons of other tokens. Where does that lead us to?
The financial system that is being built in the Blockchain world has significant disadvantages that obstacle it from conquering the world. As an example, real estate assets often cannot be fully represented in blockchain because of assets specific complexity and security requirements set up based on industry requirements.
The same can be said about the difference between traditional fundraising processes (IPO) and innovative methods in Blockchain industry (ICO, IEO, STO). NFTs also can make investment procedures and processes in blockchain more like their precursor - IPO. Implementation of NFTs might help us to feel more secure about investments and provide with additional value - an opportunity to act as a shareholder with the full right to participate in the project’s life.
How NFT implement the features that are mentioned above? The answer is in the Standards on which Non-Fungible Tokens are issued. Chosen Standard allows developers to program assets specific behavior and set up strict and detailed guidelines on how to interact with features of assets build on NFTs.
This Standard firstly used by CryptoKitties. ERC-721 was the first one for non-fungible digital assets creation. The greatest benefit of the mentioned Standard is that it allows developers to write ERC-721-compliant contracts by simple OpenZeppelin import.
ERC-721 also provides a permission way to transfer these assets, using the transferFrom method.
You can learn more (including tech specification) about ERC-721 here.
Enjin team, that developed ERC-1155 brought the idea of semi-fungibility to the NFT world. The Standard allows representing several groups of assets, not a single asset.
You can learn more (including tech specification) about ERC-1155 here.
Surely, no one would argue, that Ethereum is the most convenient and developed platform for token creation. However, other chains might be useful as well. I’m speaking about DGoods, which is working on the implementation of feature-rich cross-chain and COSMOS, who dedicated their efforts to building up an independent NFT module, that will be a significant part of COSMOS SDK.
Also, one of the newest blockchains - FLOW are open to NFT projects and already partnered with NBA, UFC and other big names to create a joint exclusive NFT items for the fans of these brands. You can learn more about how to create NFT with the FLOW blockchain here.
There are still lots of challenges ahead for NFT and the market is only in its starting position. Market capitalization is quite small at the moment. Because of the lack of spot prices for assets, it is more difficult to measure it comparing to the cryptocurrency market. If we take into account secondary trading volume (peer-to-peer) as a basis, then monthly figures are close to $2 - 3 millions.
After the 2018 CryptoKitties hype, the number of new users somehow interacting with NFT is growing at a low pace, but sustainably.
Exciting, isn’t it? If the blockchain community will fully accept and adopt Non-Fungible tokens in a short time, we would have a future on our doorstep right away.
In the meantime, if you have any questions about NFY or you are a NFT/DeFi/crypto project and want to know more how to promote you project, you can always contact me via Telegram (@baloyan) or LinkedIn.
Check out my previous articles at HackerNoon: