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What are NFTs and Why Should I Care About Themby@edemgold

What are NFTs and Why Should I Care About Them

by Edem GoldJanuary 26th, 2022
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NFTs are an acronym that stands for Non Fungible Tokens. They are used to describe things that cannot be replaced as they are special and have special properties like your computer, your favorite dress, or your key holder. They exist on a blockchain, which is distributed ledgers that record transactions. They're not directly interchangeable with other tokens 1:1. For example 1 ETH is exactly the same as another ETH. This isn't the case with an owner and this information is easily verifiable. Each token minted has a Unique Identifier.
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“Technology like art is a soaring exercise of the human imagination.” – Daniel Bell


For the past few months, I've been hearing about NFTs, and I had no idea what they were, so I decided to check them out and what I found out was pretty interesting, and so I decided to write an article about it to help those who were in the dark about NFTs like I was.


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What are NFTs

NFTs is an acronym that stands for Non Fungible Tokens(see why they shortened it?), and they are used to describe things that cannot be replaced as they are special and have special properties like your computer, your favorite dress, or your key holder.


According to Wikipedia, an NFT "is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable.[1] NFTs can be used to represent items such as photos, videos, audio, and other types of digital files."


In simple words, NFTs are digital assets that represent a wide range of unique tangible and intangible collectible items. Collectibles here simply mean anything of value, like maybe a painting by Leonardo da Vinci, a football signed by Leo Messi, the first Apple 2 computer. Things like that.

In other words, NFTs are like digital certificates which show you own a particular item.


Now we understand the meaning of NFTs, let's understand...

How they Work

NFTs exist on a blockchain, which is distributed ledgers that record transactions. Think of a blockchain as a database where you cannot easily manipulate the values. Blockchains are the underlying technology that powers cryptocurrencies.


When you buy a collectible's NFT, it's just like getting a digital certificate saying you own that particular collectible.


Think of it this way, you and a group of other people all want a particular car(collectible), and you all bid for the car, but then your price wins, and you get the car. The people who were selling the car(creator of the collectible, like artwork or something) give you a receipt proving you own the car(NFT), but to show it's really anyone can get a copy of the receipt given to you as proof that your bid got you the car(blockchain) but there will be something on your receipt which will differentiate your receipt from thee many others given to all those other people, that something serves as proof of your ownership of the car.


So in case one of the many people who got the receipt wants to get smart and claim they own the car(collectible), it won't stand.


In other words, it's like one person having the Mona Lisa and others having copies of the Mona Lisa but not the real thing.


Most NFTs are hosted on the Ethereum blockchain, and according to the Ethereum website, NFTs have some special properties:


  • Each Token minted has a Unique Identifier.
  • They're not directly interchangeable with other tokens 1:1. For example, 1 ETH is exactly the same as another ETH. This isn't the case with NFTs.
  • Each token has an owner, and this information is easily verifiable.
  • They live on Ethereum and can be bought and sold on any Ethereum-based NFT market.


In simpler words,

If you own an NFT:


  • You can easily prove you own it.
  • No one can manipulate it in any way.
  • You can sell it, and in some cases this will earn the original creator resale royalties.
  • Or, you can hold it forever, resting comfortably knowing your asset is secured by your wallet on Ethereum.


If you create an NFT:


  • You can easily prove you're the creator.
  • You determine the scarcity because you determine how much of the NFT to give out.
  • You can earn royalties every time it's sold.
  • You can sell it on any NFT market or peer-to-peer. You're not locked into any platform, and you don't need anyone to intermediate.(put's art galleries out of the market ei😅)


Now that we understand how NFTs work let's see...

What they are used

NFTs are basically used for things of value like:

  • Art
  • GIFs
  • Videos and sports highlights.
  • Virtual avatars and video game skins
  • Designer sneakers
  • Music


To read more about the cool things NFTs are used for, click here


Since we're developers, we're probably thinking about ...

How to Build with NFTs

Most NFTs are built on the Ethereum blockchain, so naturally, Most NFTs are built using a consistent standard known as ERC-721 . However, there are other standards that you might want to look into.


The ERC-1155 standard allows for semi-fungible tokens, which is particularly useful in the realm of gaming. And more recently, EIP-2309 has been proposed to make minting NFTs a lot more efficient. This standard lets you mint as many as you like in one transaction!


To read more on how to build NFTs, click here


Now you are probably wondering...

How to buy NFTs

Below is a list of sites where NFTs can be bought:

EndNote

NFTs are a really cool development in the tech world, one that will probably cause a lot of changes in how things like art, signed collectibles(like sports jerseys signed by a famous player), artifacts, and even baseball cards.


But the technology is still in its early stages and has a lot of development to do. And that responsibility will be borne by we developers as we have to create more open-source tools to make life easier and innovation faster.


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