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We must constantly update our knowledge to keep up with the exponential growth of the world’s digitalization. NFTs or non-fungible tokens have aroused so much interest that celebrities such as Amitabh Bachchan, Snoop Dogg, Steve Aoki, Eminem and Shawn Mendes have joined them.
In 2014, Kevin McCoy sold his non-fungible token “Quantum” for $1.4 million, making it the first NFT ever sold.
Although NFT has been on the market for a long time, many of us are still unfamiliar with this concept.
Strangely, this is my opinion of NFT a few months ago, I said on Twitter;
But then I started to study it to understand its bottom, and it looks like NFT will continue to exist. Before boarding the train, self-education is crucial for them.
Irreplaceable tokens are all the rage these days. For 10,000 NFTs, the fees charged by sellers on sites such as Fiverr and Upwork range from 50,000 to 1 million rupees. Therefore, you have a great opportunity to learn this new skill and seize the opportunity. This looks the same as Internet boom 2000.
What exactly are NFTs and why are they so popular?
Non-fungible tokens are cryptocurrency assets, representing a variety of different physical and virtual goods, such as real estate or visual arts.
NFTs are unique, just like real works of art. They use blockchain technology to verify their authenticity, allowing you to understand the difference between original and clone.
Request: Follow this article of mine to learn more Blockchain…
They are just blockchain records, allowing collectors to build digital collections, and each item can verify its original issuer.
Process it in this way:
Leonardo da Vinci created only one painting of the Mona Lisa. Individuals can easily make copies or draw their own versions, but only one original will exist. For NFT, this is the same concept.
The most popular NFTs are CryptoPunks and CryptoKitties.
Celebrities have shown interest in this technology, which inspires everyone’s enthusiasm for it.
Recently, the Economic Times published an electronic paper mentioning Amitabh Bachchan’s NFT.
In addition, many American artists already have some NFTs.
How does NFT work?
NFT provides a Certificate of ownership The buyer’s digital object, which also protects the value of its future transactions. A Coindesk report pointed out that artists can digitally sell their artworks to a global audience, which not only allows them to obtain greater profit sharing, but also to receive program royalties. Gamers can also become owners of in-game items and even make money from them.
It added that most NFT tokens are built using two Ethereum token standards- ERC-721 and ERC-1155. Entering the topic, let’s take a look first;
Some key features of NFT
Not interoperable:
CryptoPunks cannot be used as characters in the CryptoKitties game, and vice versa. The same is true for collectibles such as trading cards. Baseball cards are not allowed in the basketball card game.
Indivisible:
Unlike Bitcoin satoshis, NFT is indivisible and cannot be broken down into smaller quantities. They only exist as a complete unit.
indestructible:
Each token cannot be destroyed, withdrawn or copied, because all NFT data is stored on the blockchain through smart contracts. The ownership of these tokens is also unchangeable, which means that players and collectors own them, not the company that makes them.
Verifiable:
Another advantage of maintaining historical ownership data on the blockchain is that objects such as digital artwork can be traced back to the original creator without third-party authentication.
It went on to say that most NFT coins were created under certain standards. These are the ERC-721 and ERC-1155 Ethereum token specifications.
What is the relevance of the Erc standard used in the development of NFT?
As mentioned earlier, the ERC standard is an established rule for the formation of NFT on the Ethereum blockchain.
NFTs created on different blockchains may have different standards. ERC-721 and ERC-1155 are Etherem standards Most of them are using it.
Let’s see ERC-20 standard To better understand the above criteria.
Users can create Fungible (fungible) tokens using the ERC-20 standard.
Let us assume that you and I are in the same store. I want to buy 100 DogeCoin items. But I am still 20 coins short, which is less than 100 coins. So you lend me 20 Dogecoins, I pay to the store, and I can buy that item now.
One thing to note is that the 20 coins you lent me will be worth the same as my governor, for which the shop will accept your 20 governor. This means that our Dogecoin is completely interchangeable and has the same value to each of us and the rest of the world. In this way, Dogecoin was created using the ERC-20 standard because they are interchangeable.
For similar reasons, ERC-721 is the standard for creating irreplaceable (distinguishable) tokens.
Suppose you buy art for a few dollars on the digital market. You are also the owner of the original copy. Your purchase is now unique because there is only one original copy. Therefore, it is different. The ERC-721 standard can be used to design contracts that require analysis of the differences between the original copy and other copies.
The ERC-1155 token standard is an improvement of the ERC-721 token standard.
It allows the creation of Fungible and Non-Fungible tokens. In various games such as “World of Warcraft”, players can own irreplaceable items such as swords, shields, and armors, as well as replaceable items such as gold or arrows.
What is the difference between NFT and cryptocurrency?
On the other hand, cryptocurrencies are fungible, and non-fungible tokens are unique.
NFT and cryptocurrency are based on the same blockchain technology, but they are not a payment method.
NFTs are similar to air tickets-they all look the same, but have different seats and destinations.
Irreplaceable tokens are very suitable for preservation of cultural relics such as paintings and trading cards.
In the secondary market, tokens can be purchased and traded.
The biggest problem with NFT
The amount of computer power required is relatively large, similar to other blockchain-based technologies. Blockchain code requires a lot of computing power to execute. According to a study, the energy used to mine a cryptocurrency is equivalent to the energy of the whole of Ireland.
In addition, every time NFT is purchased or traded, it consumes more energy.
The purchase of NFT is intended as a long-term investment, but there is no guarantee that it will be profitable in the future. According to some experts, NFTs are essentially a large-scale pyramid scheme that destroys the ecosystem.
finally
Everything about NFT is so fascinating. like Network 3 And onboarding Metaverse It will be super crazy. However, experts currently do not recommend in-depth study of NFT from an investment perspective. Although the individual must be familiar with the underlying technology and various use cases based on it.
Please continue to follow this series, because I will soon publish more articles based on Web3 and Metaverse…
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