What are NFTs, and how do they work?

NFT stands for non-fungible token.It means that NFTs are not interchangeable and are unique.NFTs are digital assets that proves ownership for digitally scarce items and sometimes even physical items.They represent a digital proof of ownership for the item and ensures the item is owned uniquely.NFTs are individual tokens with more information stored in them.

NFTs can be for any digital assest whether it be mp4,mp3,jpeg,png or gif file.Just to take in notice that even a tweet can be a NFT!I know it sounds strange but the first tweet on twitter was sold by Jack Dorsey for a 2.9 milllion USD!

How NFTs are integrated with blockchain?

NFTs must be minted with a file.Minting is a process that registers it on the blockchain.It is possible to store file in the blockchain too but it’s not the conventional way or the cheaper one either,so the token usually points out to file’s address in a server or any off-chain system.

Let’s dive a little bit more deeper.

Fungible and Non — Fungible

Fungible simply means here to be of the same value or exchangable.A one dollar bill is exactly same to one dollar bill.They can both be interchangeable and it make no difference as they are indistinguishable from each other in value and characteristics.

Non — Fungible token means that the item is unique and has unique characteristics they cant not be changeable nor they are equivalent to one an other.An NFT,can not be interchanged to another NFT because they are not same as the other and are entirely unique which can be verified from the blockchain too.

NFTs can be implemented on any blockchain.Most common examples are ethereum’s erc-721 and erc 1155 token standards, erc721 is used to create NFTs and with different properties.

NFT’s properties

-Unique and Provably Scarce

NFTs contain information who owns and controls the digital asset and who sold the digital asset basically,all the data of previous owners and transactions.Also making a proof of ownership.

NFT basically create a certificate on blockchain for your digital item of any medium. The certificate would give your digital item a unique identity and ownership.

-Fraud Prove

NFTs can not be tampered altered or in any way be damaged as they are based on blockchain network which is tamper proof .

-Transferable

NFTs are transferable and can be traded as baseball cards are traded and other art objects.

Should you invest in NFTs ?

Keeping in mind that NFTs are only art objects.Thier value is just by how much the seller will be willing to pay for it.Suppose, if you buy a NBA players NFT ,the value of it could go down a lot as other might not be willing to pay as much as you paid for it or the trend of that particular item is gone and nobody is interested in it now.Moreover, there is no actual use case for that particular NFT.So buying an NFT is a huge risk.

Use Cases for Nfts

-Gaming

There are numerous gaming platforms on blockchain already,millions of people are now playing blockchain based games and indulge in buying and selling of their particular digital assets in the game.Some examples are Axie Inifinity,Splinterlands,The Sandbox 3D, Alien Worlds and many more.

-Fashion and wearables , music and arts

NFTs are not only used to sell online digital items they can also be linked to physical items.Many fashion companies are now following Auroboros which integrated NFTs with their products.

Also other items such as bored ape yacht club also are now valued at millions.Even music industry is entering into NFTs to trademark their music and music videos.

-Real Estate

Digital tokens can also represent a part of land that can have many attributes the main factor of this industry is very likely to adopt is that blockchain is temper proof and and land ownership would not be tempered.

-Ticketing

NFTs can be used to represent a ticket to any sports,concert or any major event .It can result in becoming a collectible.Imagine going to a famous concert or event and then storing your ticket forever on blockchain!

-Metaverse

Metaverse is virtual world .NFTs can play a major role in development of metaverse as it can help store nfts and we can verify our place or land their , in NFTs too.

The list can go on and on but I have only pointed out a few industries that are trying and considering to interact with NFT technology.Just to mention more healthcare,advertising,fantasy sports,digiatl identity are also trying to connect with NFTs .

There are numerous more cases and still more innovation to be done in the untouched world of blockchain.I won’t be surprised if something really new comes up out of nowhere.Still it’s exciting to see how things and market is developing and innovating.