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Non-fungible Token

Non-fungible Token

Ebubechukwu Lawrence's photo
Ebubechukwu Lawrence
·

2 min read

On September 20th 2017, the word Non-Fungible Token was coined.

NFTs (Non-Fungible Tokens) are digital assets that are built on the blockchain that cannot be replicated. Blockchain are distributed public ledgers that record transactions. Each NFT is stored on the blockchain with an identification code and metadata that makes it as unique as a fingerprint.

NFTs are non-fungible in that it cannot be replaced or exchanged for something of the same type or value. Each token contains a unique, non-transferable identity to distinguish it from other tokens. You can combine one NFT with another to “breed” a third, unique NFT. Just like cryptocurrency, for example Bitcoin, NFTs also contain ownership details for easy identification and transfer between token holders.

Real world application of NFTs

  1. Real estate.
  2. NFTs are used to control supply of digital contents. Because it attributes one owner to one piece of content, even if others can see the NFT, only one person can own it.
  3. NFTs are used to record authenticity and ownership of products. Whether you’ve created a piece of music, a digital artwork or video, “minting” it as an NFT means that you can prove ownership over it (as each NFT is distinct and traceable.).
  4. Ticketing.

Benefits of NFTs

  1. Market efficiency.
  2. Identity management.
  3. They can be used to fractionalize ownership of physical assets.
  4. NFTs are safe.
  5. NFTs can provide. diversification benefits to an investment portfolio.

What Are Some Examples of Non-Fungible Tokens?

Non-fungible tokens can digitally represent any asset, including online assets like digital artwork and real assets such as real estate. Other examples of the assets that NFTs can represent include in-game items like avatars, digital and non-digital collectibles, domain names, music and event tickets.

How to buy an NFT

  1. Buy some crypto on an exchange. Mostly used crypto is ethereum.
  2. Transfer crypto to a wallet eg, Metamask, Trustwallet or any wallet of your choice.
  3. Connect wallet to an NFT marketplace.
  4. Purchase NFT on NFT marketplace.

NFT marketplace is a digital platform for buying and selling NFT. Some of the NFT marketplace includes:

  1. Opensea - It's the largest Web3 marketplace for NFT.
  2. Axie marketplace
  3. SuperRare
  4. NBA Top Shot
  5. Rarible
  6. Sorare

Pros and Cons of NFTs

Pros

  1. It is accessible to everyone.
  2. Proof of ownership of an asset.

Cons

  1. NFTs are volatile.
  2. Impossible to digitize physical asset through NFTs.
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