NON-FUNGIBLE TOKENS

NON-FUNGIBLE TOKENS

By Simplify Crypto | Simplify Crypto | 25 Oct 2020


The blockchain provided an economic infrastructure that adds value to virtual assets in a way never seen before. At the possibilities are enormous and the potential for innovation and disruption shows itself stronger and stronger.

Among the novelties that were possible thanks to this technology are non-fungible tokens (NFTs), or non-fungible tokens, which are exclusive digital items issued on a blockchain.

What does that mean? Which are items similar to products with limited edition and have identifiers that point to exclusive information, such as author, appearance and other characteristics. NFTs are their own certificates, because through smart contracts it is possible to publicly verify their authenticity.

And a fungible token? Bitcoin belongs to this token category.

It is interchangeable with other tokens of the same type, that is, can be sent and received back without the person being able to notice the difference. It remains a Bitcoin and what matters is the market value of that token.

Non-fungible tokens can digitally represent collections, works of art, trading cards, virtual land, and even physical assets, such as luxury items.

They are distinguishable items from each other and, although two items appear identical, each will have information or attributes that make them irreplaceable. And here comes one of points that make them more interesting.

Because they are placed on the blockchain with a serial number, this gives the asset scarcity characteristics, which can become very valuable.

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By definition, a token can represent anything digitally. So, what would a plane ticket look like for example? What information should this token contain? A range of specific data, such as the passenger's name, departure time, route, airline and seat, that is, it is a single plane ticket that cannot be replaced.

When tokenizing this ticket, a unique token appears with exclusive data that differs it from all the others. The blockchain ensures that confidential information remains intact and cannot be changed.

Fungible tokens are often created using a standard called ERC-20. In contrast to this standard, non-fungible tokens are often built using a standard called ERC-721. In addition, they are not traded on standard cryptocurrency exchanges, instead they are bought or sold in digital markets, such as Openbazaar.

Although Ethereum was the first to be widely used, NEO, EOS and TRON now have NFT standards as well.

In July of this year, this market exceeded US $ 100 million in volume for the first time since its emergence, in 2017 and it shows itself as a market with great potential to become a large industry. Let's look at some data.
CryptoKitties collectibles were some of the first non-fungible tokens. Each blockchain-based cat is unique.

The unique information of a non-fungible token, ERC-721, as a CryptoKitty, is stored in your smart contract and recorded immutably on the token's blockchain.

Another example of a non-fungible token is Decentraland's LAND token, which represents a blockchain-based virtual world, similar to Second Life.
Each LAND token means a piece of virtual terrain identified by its virtual world coordinates.

SuperRare is another blockchain project that creates non-fungible tokens that allow digital artists to link a token to an image or GIF they have created. This token represents the ownership of the digital art created and allows the author to retain and register rights copyright. Tokens and therefore art can be bought and sold as physical works of art much more freely.

At the end of 2017, the NFT market had a market capitalization of just over $ 30 million. A year later, and despite a bear market throughout 2018, the NFT market grew by around 480%, to $ 180 million.

In 2019, the market rose about 17%, $ 210 million.

For 2020, the nonfungible.com estimate is 50% growth, with the market cap reaching US $ 315 million.ff6845058f8cef3a32f9063f3287f2defd061bc9aeccc4ba5510c38287d08689.png

After CryptoKitties, the possibility of creating verifiable digital scarcity for exclusive assets gained prominence and led to the growth of the non-fungible token ecosystem, with the appearance of marketplaces, games and collectibles.

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Starting modestly in mid-2018, the number of users of rare OpenSea items in the marketplace recently reached 20,000, a considerable trajectory.

The platform currently lists more than 10 million assets in 300 types divided into categories such as:
Domain names - Art - Trading Cards - Collectibles – Sports

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OpenSea plays an important role in helping to provide liquidity and accessibility for assets. Trading volume grew 20-fold, the highest since its first launch, with a peak volume reaching over $ 1.8 million in October 2019.

 

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This year, OpenSea averaged more than $ 1 million in monthly trading volume.

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ACCORDING TO NONFUNGIBLE.COM DATA, DURING THE YEAR 2019 THE MY CRYPTO HEROES RPG GAME AND CYPTOKITTIES HAD THE LARGEST USER BASE.

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BY VOLUME CRYPTOKITTIES LEADED, FOLLOWED BY GAME 0X UNIVERSE AND MY CRYPTO HEROES.

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The blockchain-based art market represents just $ 1.7 million of total sales and is a great example of the power of the internet, which had already allowed artists to win their own followers online. Now, through blockchain, it also enables monetization in a more free and transparent way.

It is very interesting to see the new possibilities that the decentralized ecosystem, made possible by the blockchain, has presented to the world.

Initially with ICOs, more recently with Decentralized Finance (DeFi) and now also with Non-fungible tokens, which although occupying a small niche, provide yet another way for people to use the internet to transfer value, creating an economy that will be the key to the transmission of wealth between generations in the coming years. Thus representing another new entry point for the adoption of cryptography and decentralized products.

Non-fungible tokens have an increasingly digital world in their favor and prove the ability of blockchain to be a technology that breaks barriers and provides anyone around the world the opportunity to participate and invest.

Those who understand the advantages of cryptoeconomics will have a better understanding the real value of your own money, the pitfalls of traditional finance and censorship.



Simplify Crypto
Simplify Crypto

Trying to help people to understand the crypto world from the basic concepts to the crypto projects purpose. My articles are publish in Publish0x and Hive

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