What is NFT
In the article I will tell you what NFT is, where it is applied, how and in what areas of life it will change.
NFT is called the main trend of 2022 in the blockchain. More and more news from the NFT world. But few places really explain what NFT is. I wrote this guide because I myself would like to find one when I was just digging into the topic.
I will review top NFT projects. I’ll throw in a plan on what to take the first steps in the NFT.
NFT = Non Fungible Token.
Doesn't make things clear, unfortunately. Therefore, I will formulate the meaning: NFT is a technology that will have a huge impact on all areas of our lives. Because it allows you to digitize the interaction with any virtual and physical goods. If you are still feeling uncinfident, I suggest you start trading with the help of NFT Profit.
OK. But how does it happen? To do this, all the same, let's figure out how NFTs are arranged.
You may have already heard about tokens. If not, then below I will tell you what it is. But the whole revolution lies in the word "non-interchangeable." In general, non-interchangeability is an absolutely natural property of things in nature, we are used to it and most things around us are not interchangeable.
Non-interchangeable is a thing that is unique due to its characteristics and cannot be formally replaced by exactly the same thing.
It is easier to explain with examples. Currency is a classic example of a fungible asset. Any dollar is equal to another same dollar.
There are many more non-interchangeable entities: for example, your dog. It is unlikely that you will agree to replace it with another dog of the same breed. Your apartment is unique. Phone, car, sneakers are also unique, although initially they were no different from others of the same model, but in the process of ownership, you made them unique.
Now let's move on to tokens.
A token is a designation of an entity in systems running on the blockchain.
Blockchain made it possible to decentralize everything. Decentralization is the removal of a trusted intermediary that keeps complex systems running. You trust the bank to keep information about your funds. You trust the state to store information and confirm transactions with your real estate. If the information is stored in one place, it is easy to fake it.
Blockchain allows you to store all information about all transactions on thousands of computers, so it cannot be destroyed or faked.
The first mass application of the blockchain was cryptocurrencies, namely Bitcoin - you probably already heard about it. All information about all operations with bitcoin is stored on many machines and is constantly updated, so no bank is needed for operations with this currency. And your money is not just numbers on the screen, you really own it, you can transfer it or destroy it. By the way, minus cryptocurrencies follows from this. If you have lost access to them, no one will ever restore it to you. But, as you know, with great power comes great responsibility.
Then came Ethereum. The author of Ether, Vitalik Buterin, has expanded the use of the blockchain. He invented smart contracts. These are contracts that do not require a human to control their execution. This is just executable machine code and it will definitely work the way it is programmed. Thanks to Ethereum, complex transactions with various digital assets became possible.
If you want to understand more about how blockchain and smart contracts work, read here, here and here. I would recommend doing this to see not just to know what opportunities NFT gives, but to understand why.
Previously, most blockchain services and applications used fungible tokens: bitcoin, litecoin, ether, and others.
But it became clear that not all assets are inherently equal and fungible. And transferring information about them to the blockchain and instructing smart contracts to deal with them would be cool. This is how NFTs were born.
Thus, an NFT is a digital certificate that represents a unique object.
We can attach an NFT to any digital product such as an image, video, audio, etc.
The token will contain all the information about the product. A token is an exclusive right to a product. By owning, buying, selling or exchanging a token, we perform all these operations with the product itself.
Since the tokens are stored in an open and distributed blockchain, information about this product, its owner and the history of operations with this product will always be available and reliable. We can always know who made which product and who it currently belongs to.
NFT technology potentially allows you to tokenize, that is, transfer to the blockchain, any product. Even physical. But there are still many difficult tasks. But digital goods are ideal for tokenization simply by their nature.
What can be tokenized:
- digital art
- game items: weapons, skins, characters
- any objects in virtual universes, for example, earth