NFT market is expanding rapidly and becoming more popular. Experts claim NFT is the future of the art world. We think the real potential of NFT goes far beyond that.
NFT – non-fungible token. It is a piece of data stored on a blockchain, and it is used to record and track the ownership of a unique asset. Non fungible means that the assets are not interchangeable with other assets and have unique properties, which characterize them and make them different from one another. On crypto currency markets, the majority of tokens available are fungible tokens. To contrast them with non-fungible tokens, fungible tokens have the same characteristics as other another, and can be replaced by token of the same kind. To help to understand this: 1BTC can be replaced by other 1BTC. Although, it would not be exactly the same BTC, it has the same value and it still means
that you have in your wallet exactly 1BTC. The main assumption of non-fungible tokens is to be exactly the opposite to. Thus, one NFT of some kind cannot be the same as another NFT.
Currently most popular network for NFTs is Ethereum. This creates the network most secure and decentralized, but at the same time the gas prices are increasing. As a solution to this problem new blockchains were introduced to the world, e.g. Polygon (Matic), Solana, Cardano, Tron, Tezos.
Let’s take a closer look at some of the properties:
What a blockchain is, will be explained later in the article, so please keep reading.
This gives NFTs the advantage over centralized assets. Non-fungible tokens combine some of the best traits of decentralized blockchain technologies. Also, the possibilities in this field are endless, but require more research and even newer technological solutions. We see exponential increase in the use of NFTs, but there is still a long way to go before this amazing technology and its application will be widely implemented.
Blockchain is a distributed database or public ledger of transactions and digital events. It is a growing list of records that could be represented as and called blocks. All the blocks are securely linked together through cryptography, creating one blockchain. Each consecutive block contain a hash of a previous block, which allows to verify if the block belongs to that blockchain. Also, each block contain a timestamp, which proves that the transaction was real when the block was created. This design and structure of a blockchain makes it resilient to unwanted modifications. The ledger is shared among participants and each transaction can be verified by consensus of a majority of the participants. Blockchain is immutable, which provides accountability and security for its users. It contain verifiable record of every transaction that was made on the blockchain, and any information entered into it, cannot be erased or altered. Blockchain can provide background for many technologies and applications. One of the most famous is cryptocurrency, which is basically virtual digital currency that exists on a blockchain.
It would be rather impolite writing about blockchain and cryptocurrency, and not mention Bitcoin (BTC), as it is the most popular example of this amazing technology. It was introduced in 2009 and with some peaks and troughs, its price is still increasing, reaching over $65 000 per one BTC in 2021.
NFT minting is the process of creating an NFT, and refers to conversion of digital files into digital assets and adding them to the blockchain.
Currently the most popular use of NFTs are in the world of art and games. NFT is becoming so popular, because creators can convert their own are to NFT, and avoid paying enormous fees to the intermediary party.
NFT mining refers to liquidity mining and is closely related NFT farming. This concept involves staking of NFTs. It is an investment in which investor locks an NFT in a smart contract. This action will provide liquidity to the platform or market, and will generate profit for the creator and new investors.
There are many reasons why to invest in NFT. The number of institutions, collectors and creators which are investing in NFT is rapidly increasing. Do they also see the huge potential in this amazing technology? We think the main reason is that non-fungible tokens contain the proof of ownership of the original copy, and if required, it allows its buyers to verify that information very quickly. Another very interesting property of NFT is the royalties which can be set by the owner during the minting process. This allows the original owner to receive a percentage of the sale price each time the NFT is sold in the future.
Few examples from our first NFT collection below: