kpiteng

Posted on May 26, 2021 • Updated on Jun 26, 2021

Blockchain NFT (Non Fungible Token)

#blockchain #webdev #node #crytocurrency

Hello Developers, You all are familiar with Blockchain Technology. Today We will talk about Non-Fungible Tokens (NFT). It's also popular as Blockchain NFT. So let’s start,

Take away -

What is an NFT?
The Internet of Assets vs Internet of NFT
How does NFT Work?
What are NFT used for?

What is NFT?

NFT - Non Fungible Token. That is used to represent the ownership of unique items and it is not interchangeable because each has its own properties. Consider a Song File, Art, Painting, Website Domain, etc each has its own properties because of that it can be exchangeable. You can assign an NFT token to each item which represents ownership. Whoever has NFT Token is an owner of that item.

On that other hand, Fungible Token - Can be exchangeable, It has fixed value. Considering you have $100, I can exchange 10 Notes for $10, because at the end price is $100. Here, Value is the same and you can exchange with anyone. So this is called a Fungible Token. Dollar, BitCoin Price will be fixed for each item so it can be exchangeable like 1 Bitcoin = $1. If I have 1 Bitcoin and you also have 1 Bitcoin then price/value is same for all.

The internet of assets -

Nowadays everything becomes digital, there is a need to set the properties of items like scarcity, uniqueness and proof of ownership. For example MonaLisa Painting - If you check you will get many copies of MonaLisa Paintings if it is a bit hard to find original paintings of MonaLisa which are designed by Leonardo da Vinci.

Let’s compare the spectrum of NFT vs Current Trends over Internet,

NFT: NFTs are unique, not two NFTs are same
Current Trends: Multiple Copy of a file, like Song, Artwork, it is same as original

NFT: Each NFT has unique owner, anyone can verify public records
Current Trends: Ownership are stored on specific servers

NFT: NFTs are compatible with Ethereum. You could trade your Artwork
Current Trends: Companies have their own medium to exchange Artwork.

NFT: Creator can retain ownership rights over their work and get royalties on resale
Current Trends: Ownership retail with specific streaming services and get profile from sales & num of streaming users

NFT Examples -

NFT is new topic to the world, Since companies has started their NFT Services, Let’s check some example,

POAPs (Proof of attendance protocol) -

If you contribute to ethereum.org, you can claim for POAP NFT and It is collectibles. Few crypto meetups have used POAPs as a form of ticket to their event. Contribute and Claim for POAP NFT.

ethereum.eth -

NFT Domain - .eth is registered on Ethereum via Ethereum Name Service (ENS). You can create your own NFT Domain from here.

How does NFT work?

NFTs have some properties:

Each token has assigned unique identifier
Each token has an owner and that information is publicly available and easily verifiable
NFT is not directly interchangeable with other NFT tokens. Because each NFT has a different value/price
NFT is live on Ethereum and it can be traded in any Ethereum based NFT Network

If you own NFT:

You can prove it on your own
No one can manipulate it
You can trade it, you can sell it and when its re-sell you will get royalties - as your are the creator
You can hold it forever, it’s secure in your wallet on Ethereum

If you create NFT:

You can prove you’re creator
You determine scarcity
You can get royalties on every resell - as you're creator
You can sell it on any Ethereum based NFT Network

Scarcity -

NFT Creator manages scarcity of their assets.

For example, consider a ticket for Football Match, Organiser of an Match decides how many tickets to sell, let’s say Stadium Capacity is 3000. So each 3000 NFTs are created and each NFT is assigned for each seat.

Royalties -

Creators of NFTs get royalties every time when NFT are sold. This is still a developing concept. Foundation and Zora are platforms which support royalties for their artists up to 8% every time NFT is sold on.

What are NFTs used for?

NFT is widely used for Digital Content like Song, Artwork, Gaming Items like buy a Land for game it’s your own property, Domain Names like .eth, Let’s check all in more detail.

Digital Content -

Nowadays the Movie/Television/Entertainment industry transforms to online. For example, movies. Songs, Podcast are available in live streaming and available any time by paid subscriptions. Content creators make money by publishing on Life Streaming platforms.

Harnessing the power of NFTs, now creators can manage scarcity, they have ownership on their hand, they can sell it. Also on every person-to-person sale the creator gets royalties.

Gaming Items -

NFTs get more interest from game developers. Now you can buy/purchase virtual assets for your game like Land. NFTs bring benefits for both game developers and players.

For game developers, they can create NFTs and when it is sold on a player-to-player game developer will earn royalties. On the other hand, for players, they can buy game items in the form of NFTs. Players can sell it and get return values in the form of money. Players also sell to other player as well.

Now, If game developer no longer maintain a game then also on every sold-one developer will earn royalties. On other hand for players it’s memorabilia and have a value outside of the game.

Physical Items -

Nowadays if you see multiple copies are available in the market it seems the same as Original. To prove ownership in such a case, NFT is assigned to each unique physical item. So no worries how many duplicate copies are available in the market, whoever has NFT is the owner of the physical item. This information is publicly available & verifiable.

Domain Name -

Now, The Ethereum Name Service uses NFTs to provide you Ethereum address with an easier-to-remember name like walletname.eth. Means you can ask someone to send you ETH via wallet name.eth instead of 0x23233...

Thanks for reading Article!

KPITENG | DIGITAL TRANSFORMATION
Blockchain Software Development | hello@kpiteng.com

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