A non-fungible token (NFT) is an intact, one-of-a-kind cryptocurrency token. NFTs cannot be divided into smaller pieces and used separately, nor can one NFT be substituted for another. NFTs provide a wide range of alternatives for producing and exchanging digital assets, including creative works of art and collectible video games like CryptoKitties that use the blockchain. NFTs can be used to demonstrate the distinctiveness and authenticity of rare assets, both online and offline. The ERC-721 token standard is primarily used to build non-fungible tokens on Ethereum.
Fungibility of Crypto Tokens
An asset that can be exchanged for any other identical unit of that asset is referred to as fungible. Each bitcoin (BTC) is equivalent to every other bitcoin in existence, just as it is with dollars, euros, or ether (ETH). Additionally, flexible, substitutable assets can be fractionally divided into smaller parts with the same characteristics. Fungible assets are interchangeable. Any asset must possess these qualities to be used as a payment method. Non-fungible tokens, on the other hand, are cryptographic tokens that are singular and indivisible. NFTs, like ETH and DAI, are constructed on smart contracts. However, unlike ETH and DAI, NFT contracts have specific details that distinguish one NFT from the others.
As NFTs are often created using the ERC-721 token standard, Ethereum is currently the most widely used blockchain for developing NFTs. This standard specifies a minimal set of characteristics that every non-fungible token must have, but it opens the possibility of additional characteristics.
NFTs are indisputably rare assets. The computed code in each non-fungible token confirms that it is the only asset with its unique digital identity. This crucial feature helps create one-of-a-kind digital commodities and can even be used to represent valuable physical items whose origins (chronology of possession) can be recorded and cryptographically confirmed using the underlying blockchain system. There are countless options for exclusive and uncommon objects that can be traded, including digital artwork, collectibles, and gaming items. NFTs are available to an ever-expanding consumer market through sites like Open Sea, Super Rare, and Nifty Gateway.
Some of the uses of NFTs are:
That all for NFT's, checkout a follow up article on the marketplaces for NFT trading. Happy Trading!