The uniqueness of NFTs creates their value. Owning an NFT is equivalent to owning an antique or a piece of unique art. During NFT transfer, the code representing the NFT is also transferred to the new owner on the Blockchain. NFT (non-fungible tokens) records, like owner and creation timestamps, are updated on the digital ledger so that everyone can know about its validity.
What are Non-Fungible Tokens (NFT)
A non-fungible token or NFT is cryptographic data on the digital ledger, Blockchain, which possesses unique metadata and identification codes. Therefore, each NFT is unique, and they are useful in proving ownership of digital assets, real estate, games, music, and artwork.
NFT is characteristic of the Ethereum environment. Ethereum is a decentralized, open-ended platform built on Blockchain, the distributed ledger technology (DLT). NFT is a crypto token in the Blockchain blocks that follow ERC-721 smart contract methodology.
ERC-721 standard describes the origin of NFT on Ethereum Blockchain. It defines how gaming token exchange can proceed with minimum network interface metadata, ownership details, and security.
ERC-1155 smart contract extends the NFT concept further by making it very efficient in terms of storage and transaction costs in the DLT platforms. ERC-1155 also facilitates batch processing of multiple non-fungible tokens through a single contract.
Due to the unique characteristics, NFTs don’t allow trading or exchange. NFT tokens establish individual identities. A combination of two unique NFT can produce a third unique NFT. It finds its utility in highly secure identity requirements like e-passports.
How they are Different—ERC-20 & NFT
ERC-20 is the most significant fungible token in Ethereum DLT platforms. It finds its usage in all smart contracts on the Ethereum digital ledger. ERC-20 tokens worth a specific value and therefore can participate in equivalency transactions.
On the other hand, NFTs follow ERC-721 & ERC-1155 smart contract rules. Unlike ERC-20, NFTs cannot participate in transactions or trades in exchange for a certain amount of NFTs. It is because all NFTs are unique data sets in the Ethereum Blockchain platforms.
ERC-20 is a smart contract standard, whereas NFT is a data token that abides by rules of smart contract standards. Crypto coins like Bitcoin, ETH, BNB, etc., becomes exchange eligible through ERC-20 smart contract rule.
Tokenization of Assets
Tokenization is the transformation of virtual or physical assets in the digital entity, which will allow a fair exchange for a particular monetary value. Through the non-fungible tokens (NFT) standard, you can tokenize almost every tangible or intangible asset. Tokenization also removes a geographical barrier for transactions of artwork, antiquities, music, video, game, etc.
- The virtual gaming industry finds tokenization very useful. The National Basketball Association of the USA adopted NFT tokenization to distribute collectible gaming videos.
- Royal Mint of Great Britain promoting tokenization of precious metal, like gold.
- Tokenization can also make cryptocurrencies more reliable. Tokenization will regularize cryptocurrencies through the backing of central bank-issued money. One of the examples is stablecoins.
Creating (Non-fungible Tokens) NFT Tokens
First, choose on which Blockchain you would like to issue your (non-fungible tokens) NFT. Though Ethereum is the most popular for NFT, however there are many other digital ledgers available, such as:
- Binance Smart Chain
Note that each Blockchain runs its compatible wallet services, NFT token standard, and marketplace. If you are creating an NFT artwork on Binance Smart Chain, you may only be able to sell your work on platforms supporting Binance assets.
If you are going to create a unique NFT video, music, game, or artwork, you will need the followings:
- ERC-721 supported Ethereum wallet platforms, for example, Trust Wallet, MetaMask, or Coinbase.
- An estimated $50 to $100 in ETH.
- To turn your creative work into an NFT, you need to upload it to an NFT-centric interface. You will also need to connect your crypto wallet to that platform. The most reliable Ethereum NFT market places are:
Dappros for Fungible and Non-Fungible Assets
Dappros is one of the best platforms to tokenize your assets in digital forms. You can create both ERC-20 compliant fungible or ERC-721 based non-fungible tokens. The mobile app offering of Dappros enables you to easily create, store, trade, own, and exchange all kinds of crypto tokens and NFTs. CrystalBank is the proprietary platform of Dappros, which allows you to effortlessly display, store, and operate cryptocurrency or other NFT assets.
A Compilation of Articles on NFT Tokens
|1||NFTs, explained||The Verge|
|2||What Are NFTs, How Can You Create Them, And How Are Artists Earning Cryptocurrency From Them?||Gadgets 360|
|3||Explainer: NFTs are hot. So what are they?||Reuters|
|4||NFT — Everything you need to know about non-fungible tokens||Appleinsider|
|5||NFT Art Is All About the Hype||Bloomberg|
|6||How Non-Fungible Tokens Are Transforming the Art World||Barrons|
|7||Create Non-Fungible Tokens (NFTs)||Wax|
|8||A Step-by-Step Guide to Creating and Selling Non-Fungible Tokens Built With Bitcoin Cash||Bitcoin|
|9||Non-fungible tokens (NFT)||Ethereum|
|10||Everything You Need to Know About NFTs—the Crypto Art Selling For Millions||Esquire|
A Comparison of Entities that Deal with NFTs & Tokenization
|Serial No.||Platform Name||Blockchain / Token Framework||Products OR Token|
|1||Dapper||Flow||NBA Top Shot|
|TRX, BTT, USDT|
|5||Tezos||XTZ||AirGap, Atomex, Megma|
|6||Cosmos||Tendermint BFT and the ABCI||Agoric Swingset, Cosm Wasm, Ethermint|
|7||WAX||WAX, Ethereum||WAXG, ETH, WAX Cloud Wallet|
|8||Binance||Crypto Currency Exchange||Stablecoin Project|
A decentralized, highly secure, and transparent currency system based on Blockchain (DLT) technology is the future of the global economy and finances. Non-Fungible Tokens (NFT) will play a crucial role in dealing with collectible artwork throughout the world. Tokenization will revolutionize the asset-owning systems as we see them.
Author: Bipasha Nath