Deterministic
The function used to generate the hash is deterministic. A Hash Function should have a consistent output. This means that no matter how many times you process a particular input using a Hash Function, the result is always the same. Why is determinism important? Imagine getting a different result for every transaction you record. This means that it is impossible for you to track all the input data using the hash.
Quick Computation
In blockchain technology, a good hash function is one that performs fast computations for each input. Finding the input data for a hash can be difficult, but computing the hash should ideally be very fast. For example, you should be able to get the hash result of the simple word “hello” in a fraction of a second.
One-way
An important feature of secure hash functions is their one-way nature. It is practically impossible to distinguish the input data using the output hash.
Collision resistant
In cases where a Hash Function produces similar outputs for different inputs, a collision may occur. Normally, this should not happen.
Types of Cryptographic Hash Functions
: MD5 stands for Message Digest and produces a 128-bit hash. This function is widely used as a cryptographic function. One of its problems is the problem of collisions. After 2 to the power of 21 hashes, a collision occurs.
: Keccak-256 produces a 256-bit hash. Currently used by Ethereum. Keccak is a family of hash functions that eventually standardized to SHA-3. Ethereum called it Keccak instead of SHA-3 because the Hk parameters are slightly different from the current SHA-3.
In the world of cryptocurrencies, the most widely used hashing algorithms are SHA-256 and X11.
What is an NFT?
NFT stands for “non-fungible token” and represents a digital representation of a piece of art, music, game items, etc. The word non-fungible means that an NFT photo, video, or any digital file is completely unique to an individual and has its own signature, so it cannot be copied or replaced in any way.
Look at it this way: a 100,000 Toman note can be exchanged for 2 50,000 Toman notes, but there is only one original Mona Lisa painting that is unique, and if you take a photo of the painting or print it, the original version of this painting is still unique and cannot be exchanged for any other similar copy.
Or your grandmother's ring, which was inherited from her ancestors, no matter how comparable it is to similar jewelry, the spiritual value and age of your grandmother's ring is still unique and cannot be priced and exchanged.
Although NFTs have existed since 2014, it was in 2021 that we saw an explosion in the popularity of these tokens. When Mike Winkelman, known as "Beeple", combined the 5,000 paintings he had drawn every day and sold the artwork "EVERYDAYS: The First 5000 Days" for $ 69.3 million, it was there that the power of NFTs made more noise in the world than ever before.
An NFT is a digital asset that represents online collectibles such as images and music with a valid certificate created by the blockchain.
Each NFT is unique and has its own digital signature.
NFTs cannot be copied or exchanged.
An NFT cannot be forged or tampered with in any way.
NFTs are inalienable and indivisible assets.
Anyone can verify ownership of an NFT through data on the blockchain.
How do NFTs work?
Each NFT is a digital form of an artwork, clip, collection, virtual avatar, or even a tweet, and has its own unique code, identifier, and metadata that no other token can change.
These tokens are created through a process called minting. This process, using smart contracts, converts a digital file into a digital asset and creates a unique token. Since we are looking to prove ownership of these assets, we need a transparent and immutable database to record the information records of all NFTs. This is where blockchain technology comes into play.
So, the blockchain, as a ledger, manages the ownership history and transactions of each NFT in full detail. The blockchain is immutable and distributed, and these are the very natures that allow all NFTs to be stored in a completely transparent manner and anyone has the permission to check the validity and authenticity of each NFT at any time.
Every time an NFT is created, the transaction related to it is stored in full and with an accurate time stamp on the blockchain, and it is with this information that each NFT can be accurately tracked. On the other hand, when an NFT is sold, the exact information related to ownership and ... is also added to the blockchain as a new block so that everything is clear for traders.
There are various blockchains that can be used to manage NFTs, but Ethereum is the most popular because it has a powerful network and suitable smart contracts.
Of course, it should also be noted that these smart contracts are what determine how the NFT is owned and managed. For example, a smart contract can be created in such a way that for each sale of NFTs, a certain percentage of the payment goes to the original owner.
So, you should be careful when choosing a blockchain for NFTs because a wrong choice can have bad consequences for you and cause disruption to transactions.