What Do I Need To Know About Non-Interchangeable Tokens (NFT)?
Over the past year, NFT has become one of the trends along with DeFi. As indicated by the aggregator DappRadar, in 2021, total sales on NFT marketplaces amounted to at least $ 22 billion.
Compared to 2020, volumes have increased 200 times. The market capitalization of the largest created NFTs exceeded $16 billion.
The most expensive include the NFT of the artist Beeple, his painting was sold for $69 million, NFT Cryptopank 7523 NFT, sold for $11 million, and the album of the singer Grimes, which was converted into an NFT carrier, it managed to get almost $6 million.
What are NFT and its history?
NFT (non–interchangeable tokens) are digital objects that have no analogs. We can say that the NFT is a digital analog of the document certifying the rights to it.
There is also such a definition. NFT is a cryptographic token that has a uniqueness that cannot be replaced by another token.
When did the first NFTs appear
It is considered that the first NFT was created by the artist Kevin McCoy from New York. He introduced it 8 years ago. NFT was developed on the basis of the Namecoin blockchain. However, in fact, it is not really the first, if you approach it from a technical point of view.
In 2012, the Colored Coins project was working, not only studying the possibilities of Bitcoin, but also discussing the idea of NFT. But at that time there were no corresponding technical capabilities. Nevertheless, it was Colored Coins that helped create the basis for further promotion of NFT.
After the Ethereum network was launched in the summer of 2015, developers had a platform where they could create NFT projects. The first in the Ethereum network was Ethereia, a digital world where participants grew tiles to build structures from them.
In 2017, CryptoPunks and CryptoKitties entered the market, which became mega-popular with users.
In the fall of 2017, Dieter Shirley, who works at Github, proposed to make token standards for non-interchangeable tokens, indicating that the blockchain infrastructure needs to be improved so that it can recognize non-interchangeable tokens. In fact, it was Shirley who came up with the designation “NFT”. On his recommendation, the ERC-721 standard was adopted.
NFT Release Standards
There are several NFT release standards. Just the most famous is the ERC-721. This is the release standard used on the Ethereum blockchain. But he’s not the only one.
There is already a more modern standard – ERC-1155. Thanks to him, the capabilities of assets have expanded, and it has become possible to add both an NFT and an interchangeable token to one contract.
In 2018, the ERC-988 standard was introduced. It is possible to combine different assets into one combination. Confirms the ownership of the tokens ERC-20, ERC-721.
Due to standardization, it has become possible to carry out transfers between various applications without difficulties. Since the Ethereum blockchain has higher commissions, its own NFT standards have been developed on the BSC network. These are BEP-721 and BEP-1155.
As mentioned earlier, millions of dollars can be earned on NFT. Many projects and individuals have started to create their own NFT objects in the hope that they will bring them significant profits. It is unknown how many NFT creations are on the market now, because anyone can create them.
How to create an NFT yourself without extra effort?
To create your own NFT, you can use the services of numerous exchanges and NFT platforms. Such services are offered by Raible, Mintable, as well as the DecimalChain platform, where users can create unique NFTs using smart contracts.
It is enough to have a certain amount in cryptocurrency on the account to pay the commission for the creation and digital object, which will turn into an NFT. As an object, you can choose a music track, animation, meme, or image.
They are digitized and an exclusive token is connected to them, which confirms their rights to it. Then you can determine what information to write to the NFT, and what the NFT will look like. The information is recorded in the blockchain.
Where is NFT used now?
It is worth saying that today, the attitude of users to NFT is very ambiguous. It is not uncommon to read criticisms regarding NFT, and here are a few of them:
According to art historian Tina Ryan, contemporary art museums do not believe that NFTs “represent lasting cultural significance.”
And according to Jorge Stolfi, who compared NFT with the registry of stars:“everyone understands that the registry offers only imaginary ownership, and does not give real ownership of the star”
Some companies are only experimentally using the technology to “test” its capabilities.
(projects conducting experiments with NFT)
The NFT ecosystem includes many interesting projects that benefit society in various fields. Here are some of them:
Digital art, where NFT is a confirmation of the right to a particular creation. A huge number of such works are sold on marketplaces like nft.bit.team.
Used by NFT and game projects. They are owned by gamers themselves as a reward, passing through various stages of the gameplay. In some games, NFT is allowed to sell on trading platforms.
One of the most famous projects using NFT in games is Sandbox, CryptoHeroes, and Decentraland. NFT is also used in the tactical game NFT Fur and Fury (“Fur and Fury”) from the DecimalChain platform.
In addition, NFT tokens are used in areas such as law, insurance, real estate trading, licensing, and documentation verification.
Also, NFTs began to be implemented in 2021 in Defi projects, where they act as collateral for loans.
Now NFT is also used as a means of investment. Investors purchase tokens in order to resell them much more expensive later or hand them over as collateral to other users.
What is the fate of NFT in the coming years?
Most likely, NFTs will become more and more in demand as an element of confirming their social status and access to closed communities, by analogy with the upper world in the past centuries.
This trend was set by the BAYC platform, its participants who own NFT get access to private parties. NFTs will become more and more in demand in the market of collectibles, finance, documentation verification and product authenticity verification.
According to analysts of the Deloitte portal, in 2022, sales of fan-made NFT-works will increase significantly, and sales volumes will grow over $2 billion.
The demand for old NFT collections, previously released and now collectible, will also grow. Auctions such as Christie’s will increasingly advertise NFT objects to boost their own profits. Due to the increase in the number of Metaverses, the demand for NFTs included in their composition will also grow.
Thus, further growth of the NFT sector should be expected, and they will be used in many sectors of the global economy.