What is NFT?
5 min reading
What is a non-fungible token or NFT? Is it different from other tokens? Let’s find out together.
What is NFT? And why is it different from other tokens?
Blockchain and cryptocurrencies have been around for years, but NFT is relatively new. What is it? Technically, any cryptocurrency is a token, but not every token is a cryptocurrency. It depends on what functions it performs. A blockchain is a database that is simultaneously stored on a huge number of computers. In the traditional model of the Internet, all devices are connected to centralized nodes. In a blockchain system, all the devices simultaneously store all the information published on the blockchain. Tokens are a register entry within the blockchain. The distinctive feature of most tokens is the principle of interchangeability.
What is NFT?
NFT, a non-fungible token, is a type of cryptographic token, each instance of which is unique and cannot be exchanged or replaced by another similar token. An NFT functions like a cryptographic token, but unlike cryptocurrencies such as Bitcoin, are not mutually interchangeable, in other words, not fungible. There are things you can’t replace, like the Mona Lisa. The original is one, the others are just copies. That is why the format of non-interchangeable tokens was created in order to transfer unique items to the blockchain.
Each NFT is unique and exists in a single copy, it cannot be separated, and all information about its author, buyer, and all transactions with it is securely stored in a blockchain.
An NFT is a digital certificate attached to a unique object. Most NFT tokens work on the Ethereum blockchain and use the ERC-721 standard to create them. Functionally, they are almost identical to the most common tokens of the ERC-20 standard. But there is a very important exception – the very non-interchangeability, which allows ERC-721 tokens to confirm the uniqueness of an asset. Anyone who owns the intellectual rights to the artwork or a product that exists in digital form can create their NFT token. Releasing your NFT is called minting. To mint your drawing or work it is possible to do it on Rarible or OpenSea and others.
NFT is not only a tool for tokenization of digital art objects and various collectibles. But this technology has also reached financial services, especially decentralized ones. In the last few months, projects that operate on the DeFi market and use NFT have started to appear.
The owner of an NFT can dispose of the token at will, including reselling it. So far, this rarely happens – the market for non-interchangeable tokens is at a very early stage of its development, so the number of resales of NFTs remains insignificant.
How do I create my NFT token?
It turns out that creating an NFT token is not hard at all. In total, to create your NFT token, you need an Ethereum wallet, the website opensea.io. and the particular content you want to put into the token. Go to: OpenSea, choose to Create/My collections. And in case you are not registered, you’ll get a window that you need to login through the ethereum wallet. To add a token, you must create a collection for this press “Create”. Add the logo of the collection, the name of the collection, and description, here is a collection created! You can add items (tokens) by clicking on “Add items” and in the next window “Add new item”.
Add the media file you want to put in the token. This can be a picture, video, 3D model, sound. Allowed formats are JPG, PNG, GIF, SVG, MP4, WEBM, MP3, WAV, OGG, GLB, GLTF, up to 100 MB. Also, add the name of the token. You can add a link and description below, and you can also add various characteristics to the token. You can also add locked content, which can only be seen by the buyer (the owner of this token). Next, specify the number of copies in which the token is being issued. Click “Create” and the token is created! It takes a couple of days to verify it. Afterward, you can sell it if you want. To do this press “Sell”. Usually, on Opensea, the sales are done in an auction format. You don’t have to pay money to create digital art and store it. It will be necessary to verify the token and put it up for auction for sale and the commission for this will be 0.03 Etherium.
What can you sell in an NFT form?
Anything can be sold in the form of NFT: images, text, music, videos, event tickets, artifacts from video games and virtual reality, or even the rights to use cryptocurrency wallet names – that is, any digital product that claims to be unique. Collectors, gamers, major publications, singers, as well as artists and art lovers pay special attention to NFT.
The market for non-interchangeable tokens is developing extremely fast and blockchain technology and infrastructure has changed dramatically in the past few years. One potential future application of NFT is the blockchain recording of unique documents. Due to the reliability of the blockchain, diplomas, certificates, and various documents could be issued in NFT format, potentially helping to eliminate the risk of forgery.