NFT - Where is the cornerstone of encrypted digital assets?

At this stage, digital assets such as cryptocurrencies and their classification are constantly evolving along with encryption and blockchain technology. Non-fungible tokens (NFTs) are another example of the rapid changes in the industry. In this article, the author of Interstellar Vision will give an in-depth explanation of NFTs.

NFT (non-fungible Token) non-fungible tokens contain identifying information recorded in their smart contracts, and it is this information that makes each NFT unique, so they cannot be directly replaced by another token. They cannot be exchanged like that, because no two are alike. In contrast, paper money can simply be exchanged one for another, and if they are of the same value, there is no difference to the holder.

To give a simple example, the Bitcoin we are familiar with is a homogeneous token: we can choose to send a BTC to a friend, and they can also send a BTC to me. No matter how the BTC is transferred, it is still BTC, and it has not changed in essence. What changes is only the value that changes over time. You can also send or receive any part of Bitcoin, measured by the corresponding price, because the replaceable token is divisible.

NFTs are indivisible, just like you can’t send someone a portion of a concert ticket. A portion of a concert ticket itself is not valuable and is not redeemable. The unique information of an NFT (such as CryptoKitties, the world’s first virtual cultivation game based on blockchain technology) is stored in its smart contract and recorded in an inimitable manner on the token’s blockchain.

NFTs have unique properties: they are usually associated with a specific asset. They can be used to prove ownership of digital items (such as game skins) up to ownership of physical assets.

Other tokens are interchangeable, the same as coins or banknotes. Fungible tokens are identical, they have the same properties and value when exchanged.

NFTs can be used for digital assets that need to be distinguished from one another to prove their value, or scarcity. They can represent everything from virtual plots of land to artworks, to ownership licenses.

Non-fungible tokens are not traded on standard cryptocurrency exchanges, but are bought and sold on digital marketplaces like Openbazaar or Decentraland’s LAND marketplace.

Tokens, such as Bitcoin and Ethereum-based ERC-20 tokens are fungible. NFTs, such as those used by platforms such as CryptoKitties and Decentraland, are ERC-721. NFTs can also be used on other blockchains that support smart contracts using non-fungible token tools and support. Although Ethereum was the first to be widely used, NEO, EOS and TRON all have NFT standards.

NFTs and their smart contracts allow for the addition of detailed attributes, such as the owner's identity, rich metadata, or secure file links. NFTs' strong proof of digital ownership is an important advancement in an increasingly digital world. They can see the blockchain's trustless security promise applied to the ownership or exchange of nearly any asset.

To date, the challenges of blockchain, NFTs, its protocols, and smart contract technology are still under development. Creating decentralized applications and platforms for managing and creating non-fungible tokens is still relatively complex. There are also challenges in creating standards. Blockchain development is fragmented, and many developers are developing their own projects. Unified protocols and interoperability may be required to succeed.

NFTs can be purchased on a large number of NFT marketplaces, including Rarible, OpenSea, and Enjin Marketplace.

The following is just an example of the Rarible website. Assuming that Interstellar Vision wants to purchase NFT, the specific steps are as follows:

1. Go to the Rarible website and click the "Connect" button in the upper right corner. From here, select the wallet you want to connect to the platform and log in. We use Metamask to connect.

2. Once logged in, Interstellar will search for NFT platforms to purchase. We will show you how to purchase Jango's "Hand of Fate". The process will be similar regardless of which NFT you purchase (assuming you can purchase it directly). After selecting the NFT you want to purchase, click the "Buy Now" button.

3. A confirmation window will pop up, asking Interstellar to double-check the details of your order. If you are happy to proceed, click the "Continue to Payment" button to move to the final step.

4. Click on the wallet and a pop-up will appear asking you to confirm the transaction. Again, if you are happy to proceed, just confirm the transaction and it will be processed. Once confirmed, the NFT will be directly deposited into the Ethereum address and will be retained permanently.

Note: You may want to avoid purchasing NFTs during peak hours, otherwise you may end up with excessively high gas fees (as per our example below).

1. Terra Virtua

A major emerging market for NFTs is the creation of digital collectibles , similar to physical trading cards, which derive their value from scarcity. Many brands have begun licensing their content for use in digital collectibles: One of the companies at the forefront of the movement is Terra Virtua.

Terra Virtua calls itself the “home of digital collectibles ,” enabling fans to create a digital “fandom” where they can display their NFT assets. In September, the company released a series of licensed NFTs inspired by The Godfather film trilogy.

Terra Virtua CEO Gary Bracey told Decrypt that Terra Virtua's "core mission is to bring NFTs into the mainstream," adding that the use of NFTs was inspired by the idea of ​​connecting the digital world with the real world.

2. SuperRare

While Terra Virtua creates NFTs inspired by big brands and Hollywood, other NFT marketplaces trade art, another major NFT industry.

SuperRare is one of the leading players in the emerging NFT-driven digital art space. As the name suggests, SuperRare provides a marketplace for rare and valuable digital artworks. On SuperRare, artists’ works are authenticated on the Ethereum blockchain to ensure value.

Although, according to its website, SuperRare is only onboarding "a small number of carefully selected artists," it's doing big business. In October 2020, SuperRare posted $4 million in art sales on its platform, with artists earning $4.6 million after selling more than 11,000 pieces of art.

3. Decentraland

NFTs are also increasingly appearing in the gaming space. Decentraland is the world's first fully decentralized gaming world, built on the ERC-20 token MANA. Users can spend MANA to purchase goods, services, and 10x100,000 plots of virtual land, which are backed by non-interchangeable LAND tokens. Decentraland's ICO initially raised $20.7 million for MANA tokens and sold out in 5 minutes. In the subsequent land auction, users spent 161 million MANA to purchase virtual plots - about $15 million at current prices.

The NFT space has grown steadily in 2020, with daily activity in blockchain games growing 35% in 2020 to around 28,000 active unique wallets per day, according to a January 2021 report from DappRadar. In February 2020, NFT marketplace Rarible locked in $1.75 million in seed funding from well-known industry names, including Coinbase Ventures.

At the same time, NFT transaction amounts are also dazzling. Teen artist FewociOUS has sold NFT artworks for tens of thousands of dollars: a trading card representing football player Kylian Mbappé was sold for nearly $65,000; in an auction of works by digital artist Beeple, a bidder won a batch of works at the last second for $777,777: a 24x24 pixel image sold for $176,000. NFT mania reached new heights in February 2020, when an Ethereum project called Hashmasks saw 16,000 NFT artworks sold for $9 million.

Big revenues have followed as artists and celebrities jumped at the opportunity to cash in, with rapper Lil Yachty; Rick & Morty creator Justin Roiland; DJdeadmau5; and YouTuber Logan Paul, among others, launching NFTs.

Currently, most of the attention around NFTs is focused on art, games, and crypto collectibles. An increasing number of well-known brands are licensing their content for NFTs: fantasy football game Sorare has signed 100 football clubs to its platform, while shows like The Smurfs, Minecraft, and BBC’s Doctor Who have all been rendered as NFTs.

For games, NFTs can be used to represent in-game items, such as skins, potentially allowing them to be ported to new games or traded with other players. However, their potential is much greater with possible applications to copyright and intellectual property, ticketing, and the sale and trading of video games.

NFTs add the potential for the creation of security tokens, the tokenization of digital and real assets. Physical assets such as property can be symbolically represented in fractional or shared ownership. If these security tokens are not interchangeable, asset ownership is fully traceable and clear, even if only tokens representing partial ownership are sold. We believe that one day, our digital wallets could contain proof of every certificate, license, and asset we own.

Warm reminder: This article is translated and edited by Interstellar Vision, please do not plagiarize.

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