Let your latent creative artist come alive with NFT. We will cover NFT in detail today and see how actually it functions?

I am extremely fascinated by this new concept of NFT and often feels:

“ Digital assets like NFT’s are the new kind of wealth which is indivisible and can express any kind of emotions associated with both living and non living things ”

So today to give a wing to all my readers’ imaginations, I would like to detail out NFT, to help you all comprehend the same in a simplified and crisp manner.

We will cover the following topics going forward with our NFT learning journey: 

• What Is NFT All About?
• What Is Fungibility?
• Key NFT Attributes One Should Know
• What Is So Special About NFT?
• How Does NFT Works & Used?
• How To Mint NFT?
• How To Transact NFT?
• NFT Use Case
• Advantage & Disadvantage Of NFT
• Top NFT Projects

Let’s kick start the journey by understanding:

What Is Fungibility?

To clearly understand the meaning of non-fungible token, we first need to decode what it means to be fungible,

By Definition :

• Fungibility is the ability of a good or asset to be readily interchanged for another asset of the same kind, without sacrificing its value.
• Fungibility also defines an asset that can be divided but still retains the original value.
• Money is a prime example of something fungible, where a $1 bill is easily convertible into four quarters or ten dimes, etc.

Bitcoin is a fungible token. You can send someone one Bitcoin and they can send one back, and you still have one Bitcoin.

Now that we have understood the concept of fungibility, its time to define

What Is NFT: Non-Fungible Token & What Are Its Key Characteristics?

Technically :

The non-Fungible token is a digital asset generated cryptographically containing identifiable info captured by the smart contracts. It makes use of blockchain technology to link with a unique digital asset that cannot be replicated.

We can also define NFT:

To be a digital asset that depicts these key attributes & these are the attributes that make NFT special.

Scarce:

NFT finds its real value because of its scarce nature. NFT creators always set a limited supply of NFT being generated, to ensure its scarcity is maintained to preserve its value.

Indivisible:

Unlike Bitcoin or any other crypto’s NFT are not divisible into smaller units. So if you want to buy any digital art , you can’t buy it in pieces, you have to buy it as a whole entity.

Unique: One Of Its Kind

Each NFT has got a unique identity and can’t be duplicated, the information associated with NFT is like a certificate of authenticity.

In a nutshell:

NFTs are tokens that can be used to represent ownership of unique items. They let us tokenize(Digitise) things like art, collectibles, even real estate. They can only have one official owner at a time and they’re secured by the blockchain network like Ethereum. The information stored in the blockchain network is unmodifiable(immutable ) thereby ensuring the ownership remains intact

Now that we have understood the specialty of NFT’s, let’s deep dive further to understand how NFT actually works in the blockchain ecosystem and in the crypto world

How Does NFT Works, What Is The Underlying Tech Behind It?

To understand the working of NFT, one should know about

ERC-721 Token Standards :

ERC-721 is the standard associated with Ethereum blockchain, to loosely describe non-fungible tokens. Whenever a developer creates an NFT on the top of the Ethereum network they apply this ERC-721 protocol to adhere to the Ethereum standards set aside for this unique, indivisible, and scarce digital asset.

Ethereum has been the most popular smart contract (blockchain), supporting NFT standards, but now in 2021, we have multiple decentralized platforms Smart contracts like NEO, EOS and TRON, etc, which have NFT standards.

Smart Contract Is Key Here:

The underlying smart contract software is used by the user to attach the attributes like

• Owner unique identity
• Asset metadata
• Secure URLs

The ability to secure the ownership of a digital asset and prove its uniqueness has been one of the game-changing technologies and has been the reason for the massive popularity NFT has garnered between 2020 and 2021. It further cements the power of blockchain and enhances the belief of the user on the trustless security applied to the ownership, or exchange of almost any digital asset.

“Tokenizing” these real-world via NFT standards as a tangible asset allows them to be bought, sold, and traded with enhanced trust and minimized fraud

How to Mint NFT?

You can create NFT on any of the smart contracts enabled blockchains like 

• Ethereum
• Binance Smart Chain
• Flow by Dapper LabsTron
• Tron
• Cosmos
• EOS
• WAX
• Polkadot

etc...

The only thing which you need to keep in mind is that once you mint any particular  NFT on any given blockchain, it is most likely impossible to transfer them or sell them on other blockchains. so DYOR is recommended before you select your preferred blockchain platform. Your choice of the blockchain will determine the array of NFT marketplaces you can choose access and choose from. For example on the Ethereum blockchain, you get access to a rich list of NFT platforms including OpenSea, Rarible and Mintable. On the other hand, on the  Binance Smart Chain you get access to are BakerySwap, Juggerworld, and Treasureland. 

To help you familiarize with the NFT minting mechanism, we will make use of the Ethereum blockchain for the time being 

Minting NFT On Ethereum: 

The first and foremost thing you need to do is to be ready with your crypto asset loaded on any of the Ethreum based wallets which support NFT and a user account on an Ethereum-focused NFT marketplace. Some examples of popular NFT wallets that areMetamask, Trust Wallet, and Coinbase.  We will learn NFT minting using Ethereum based NFT Platform called  OpenSea and use MetaMask as our wallet provider.

So if you are ready with your wallet and have got the user account, perform the following given steps :

• Type https://opensea.io/ on your browser and once you get the landing page, click on the  Create menu option 

Go ahead & connect your MetaMask wallet and digitally sign a message on your wallet to confirm the ownership of the address.

• Once this is done, hover your cursor on the Create menu on OpenSea and click My Collections.
• On the new page, click the blue Create button and proceed to upload the artwork for your art or other creative digital items. 
• Enter the name and description of your file and upload a featured banner image at the top of the page.
• Once you have submitted the necessary information, you can go ahead to upload the image, art, audio, or 3D model. 
• You can also configure the scarcity, uniqueness, or even locks for your NFT. 
• After you are done with all the extra customization, click Create to mint the NFT. 
• Once that is done you just need to confirm the creation of the NFT on your wallet by signing another message. Immediately after the confirmation, you will see that your NFTwill appear as a collectible in your wallet. 
• Now, You can then list the NFT on the marketplace by clicking the Edit button. This will redirect you to a page where you can choose the ERC-20 token you want to receive as payment and set a royalty clause

Woohoo! you have successfully minted your first NFT!!!

NFT Use Cases One Should Know :

The non-fungible token has multiple use cases like

• Online Gaming
• Digital Arts
• Collectibles
• Identity etc..

Online Gaming :

If you are one of those game fanatics who loves to purchase digital goods in the game to use as power-ups or as a prop to progress in the game, you would be happy to know that there are multiple multiplayer games that allow you to trade NFT’s. Video game stakeholders are utilizing non-fungible tokens (NFTs) and other digital assets to incentivize players into spending even more time on the game by earning fiat money.

NFT has gained a lot of popularity because if you have some digital assets lying in one of the games you are not able to utilize this purchased good anywhere else, but NFT solves this issue, using it players can easily transfer their assets and use them in different games.

Non-fungible tokens are well poised to foster in-game economies to the next level

Digital Arts:

Digital art (an artistic work or practice )has been the maiden use case of NFT, which is created by making use of digital technology (blockchain, smart contract)as part of the creative or presentation process. The Digital art purchase via fiat money though doesn’t establish actual ownership, but NFT has changed these dynamics because of its underlying blockchain technology that ensures the unique signature and ownership of NFT's whosoever owns it.

Some Notable Example:

The Figma CEO Dylan Field owned a digital avatar entitled “CryptoPunk #7804” sold it for US$7.5 million to an anonymous investor, as well as a second avatar “Ape, Fedora #6965” was sold for US$1.5 million in February 2021.

Decentraland :

A Virtual Land NFT (a digital asset in the form of Land ). In the Decentraland project, user can own Assets like land, in the virtual form to trade it later

Collectibles:

NFT can be used to club digital assets to form collections, like WWF stars cards, Cricket star cards or Disney character cards. These collections are called Collectibles

In February 2021, a LeBron James slam dunk NFT card on the NBA Top Shot platform sold for $208,000. In May 2021 NBA Top Shot reached 1 million users

NFT Problems Worth Discussing :

Not So User Friendly (Tech-wise):

Decentralized networks are not easy to adopt and use for everyone. So getting started with NFT development is not so straightforward, developer has to

• Manage user authenticity
• Managing & verifying the sell and purchase details and strong the required info required one to be familiar with blockchain technology. So yes NFT is hard to start with but lucrative to maintain in terms of commercial value

Security Risk :

If you lose your private key used to buy NFT you will lose your ownership and will find it difficult to prove your identity. The risk of losing this password is real and can have precarious outcome so you need to take all the measures to preserve your private keys

It can be hacked :

NFTs are sold on online marketplaces, which means scammers might begin taking advantage of casual buyers who are not educated and well prepared to use all the security measures.

Larger Adoption Of NFT Is Still A Challenge :

NFT tech required huge infrastructure support and it is still not as mainstream tech among users in terms of popularity and adoption. There are very few people who understand the underlying tech and its value. We need the same level of sophistication in blockchain for NFT’ to truly capture the imagination of the world at scale.

Let’s Discuss Some Popular NFT Projects :

CryptoKitties: A popular Gaming platform built on top of Ethereum:

On this platform, you can start your digital Cat Collection. Not only this, with the digital kitties you create,

• You can feed and breed them
• You can adopt kitties of all colors and shapes.
• You can create collections of your favorite cats and share them with our breeding community.

Each cat is one-of-a-kind and 100% owned by you; it cannot be replicated, taken away, or destroyed.

It has seen a huge growth & bull run since its much-hyped launch in 2017 and still continues to be one of an NFT bastion.

What All Can You Do On CryptoKitties Platform?

• Buy & sell cats with their NFT community
• Crack puzzles alongside other players
• Create collections & earn rewards
• Chase limited edition Fancy cats
• Breed adorable cats & unlock rare traits
• Play games in the KittyVerse

Decentraland: First-Ever Virtual World

This is one more popular NFT platform which allows user to, Create, explore and trade the virtual land and own it on Decentraland’s, decentralized world

As a participant, you can

• Create scenes,
• Own lands
• Create artworks,
• Create collectibles
• Buy and sell on the Decentraland digital marketplace
• Create challenges and more…

Users get the simple Builder tool, to h build their own virtual world and compete to win lucrative incentives.

Ethereum Name Service (ENS):

Its is a Decentralised naming for wallets, websites, & more.

This is another crazy use case of NFT. It is a domain name service project that took birth in mid-2017.

The .ETH domain names are NFTs that use Ethereum’s ERC-721 standards and are tradable on any NFT marketplaces.

NBA Top Shot:

This is an NFT marketplace dedicated to selling digital collectibles of moments from NBA history. It hosts ‘packs’ of memorable moments from games, a certain shot or score. The clip can last around 5 seconds. The NBA issues a certain number of editions for each pack and they will not create more, that number is final.

So if you are a crazy fan of the NBA then NBA Top Shot is probably interesting for you.

Some NFT Stats You Should Know :

As of date, As per nft-stats.com, Top selling NFT projects in the last 30 days are :

                                     Source: nft-stats.com

Market Size:

As per NonFungible.com

• More than $2 billion was spent on non-fungible tokens, or NFTs, during the first quarter of 2021 which is a jump of about 2,100% from Q4 2020
• The NFT market’s big Q1 comes after $93 million worth of NFTs were sold between October and December of last year.

The Road Ahead For NFT:

This non-fungible tech has grown exponentially since 2020 and has seen large-scale adoption from celebrated sportsmen, artists and elite investors like Mark Cuban and Gary Vaynerchuk.

Mark Cuban is very fascinated by NFT prospect and has created an online gallery for people to their display digital art, with the name lazy.com

Lazy

The lazy way to show off your NFTs.lazy.com

In may Gary Vaynerchuk announced that he’s launching his first NFT collection, “VeeFriends,” a series of 10,255 character tokens available for purchase via the cryptocurrency Ethereum.

So I feel:

NFT has definitely established itself as a one of its kind tech to inspire the creative imagination of one & all. They are not free from the security breaches, scalability issues , hyped prices etc.. but this challenge remains for all the promising projects associated with the blockchain world.

Crypto which has revolutionized the investment world and has given new hope to the masses are also battling their way out. So I feel NFT is here to stay and grow due to its inherent nature of being inclusive and storing the value of being unique and indivisible.

Note!

This article was first published on Medium, Here is the link for the same:

https://medium.com/crypto-wisdom/non-fungible-token-nft-basics-for-absolute-beginners-df5ad04b5637