BCGAME - Free 5BTC Daily Bonus!Let's say someone gave you a painting by Leonardo Da Vinci.
At first, you probably wouldn't believe it was a Da Vinci original. But if the person who gave you the painting is trustworthy, you can ask the nearest art expert to confirm its authenticity. The specialist would go to his house and examine the composition of the painting. If the expert thought it was Da Vinci-style, he would call a team of appraisers to see if it was a well-painted fake. This may seem like an exaggeration, but how else would you know if the painting is original?
With NFTs, non-fungible tokens, the above scenario would not exist. If an NFT is attached to a digital artwork, you can be 100% sure that the work is original. If you take a screenshot of a digital artwork featuring an NFT, that screenshot will never be the original. Simply put, the screenshot will not have the cryptographic token, the NFT, attached to it. Anyone can easily identify any copy as fake because it would not be identified in the blockchain. No team of experts is needed to verify this.
That's why a digital artist like Beeple can sell a piece of NFT digital art for $69 million. We know for sure that it's an original Beeple. As long as the token is attached to it, there will be no debate. Metavokan can sleep peacefully at night knowing he is the owner of Beeple's 'Everyday: The First 5,000 Days' book. The work will never be wrongly attributed to another artist, as a painting by Rembrandt was thought, for decades, as the work of his apprentice.
With just this information, it's easy to see why NFTs have exploded onto the world stage. To better understand NFTs, let's look at how the ecosystem came about.
In this article, we will discuss:
Brief History of NFTs
Colored coins on the Bitcoin blockchain are often considered the first NFTs. They were very limited in functionality and far less effective than the NFTs we have today. At the very least, they paved the way for thinking about non-fungible tokens. Colored coins represented various assets including coupons, properties, subscriptions and digital collectibles. Even so, the technology was in its infancy. A regular database was much more practical than using colored coins, so it did not see widespread use.
Still, it made people realize the potential of having assets in a blockchain. It wasn't until the 2014 Counterparty peer-to-peer protocol, a platform built on top of the Bitcoin blockchain, that NFTs began to take shape. Digital assets and games were placed in the Counterparty. Spells of Genesis and Pepe Memes games were popular NFTs on the platform.
When 2017 rolled around, Ethereum started to take off. The now famous Cryptopunks were put on the blockchain. These 10.000 unique characters soon became digital collectibles. Cryptopunks are simple but were some of the first NFTs minted on Ethereum. Not long after, CryptoKitties made its debut in October 2017, a tipping point in the popularity of owning digital assets. Investors like SamsungNEXT and Google Ventures started pouring wealth into NFTs after seeing the immense possibilities.
In 2018 and 2019, NFT markets such as OpenSea and Rarible began to gain ground, allowing anyone to create their own NFT art. This was largely due to the Metamask wallet, which allows for easier access to NFT space. Although originally proposed in 2018, the current ERC-721 NFT standard began to flourish in subsequent years.
It is through the ERC-721 that platforms such as Decentraland, Crypto Heroes, Gods Unchained and a host of current games and applications are made possible. ERC-721 (Ethereum Request for Comments 721) allows for more than just business cards and collectibles. You can mint event tickets, buy digital land, exclusive gaming apparel, music and music videos, and a myriad of other features that offer a wide range of creative assets. All are interoperable on the Ethereum network as well, allowing for some interesting cross-platform functionality. For example, you can find virtual reality museums in Decentraland of NFT art purchased from other platforms.
Now that we have an understanding of the history of the NFT, let's discuss the general idea of NFTs.
What does it mean to be fungible?
To better understand non-fungible tokens, we'll discern what it means to be fungible. Fungibility is often used in finance to talk about items that are interchangeable and indistinguishable. Fungible items can also be divided into parts.
A clear example of this would be coins. In USD, a $5 bill is interchangeable and indistinguishable from another $5 bill. Five $1 bills equal one $5 bill and four $5 bills equal one US bill $20 and so on. These are considered fungible. Although scarce and created with advanced technology, cryptocurrencies are also fungible. One Bitcoin unit can be exchanged seamlessly for another Bitcoin unit. And 0,02 Bitcoins are fungible with 0,02 Bitcoins.
non-fungible examples
In all probability, your cat is not interchangeable with your neighbor's cat. Even if your neighbor's cat is also the same Siamese breed, maybe your cat is nicer and won't scratch the couch. A rare, limited-edition Pokémon card is also non-fungible. Even though a 1st Edition Pikachu might have the same holographics as another 1st Edition Pikachu, one might sell at auction for $40.000, while another sells at auction for $80.000. Your car is also non-fungible. While it may even be the same model, yours may have a lot more miles or a clean interior, making the value very different from another car with fewer miles and more damage.
Cats, cards and cars are also indivisible. Separating them into different parts would cause their value to change significantly. You can't just cut out a baseball card and expect it to have the same value. With fungible assets like the US dollar, you can split a $20 bill into $1 bills. These non-fungible assets are distinguishable and not interchangeable.
That's what an NFT tries to turn a digital asset into. It uses cryptographic technology to ensure that what you have is genuine. The token attached to that artwork, collection, or digital property is uniquely yours. Whether you buy a Fewocious artwork, a collectible card online, or a digital property in Upland , you can rest assured that the digital asset is yours. You don't need a lot of paperwork and verification to make sure you have that particular piece of digital land. All you need is ownership of the token.
This raises the question. Why would anyone spend their hard-earned encryption on these digital assets? Is it more than just trying to trade these assets to get rich?
Subjective Value
Subjective value is at the heart of what makes NFTs valuable. As long as one thinks a digital Gronkowski Super Bowl card is worth $1,8 million, then there's a market for that card. In a sense, it is digitally signed by the person who creates the NFT. A buyer has Grownkowski's digital signature forever. This has a lot of sentimental value for people who are fans of celebrities.
NFTs are also arguably much safer than owning a physical asset such as a rare baseball card. There may be an accident, for example, such as a devastating fire that sets your home and your card collection ablaze. Maybe a thief finds out about your $1 million Babe Ruth card and steals it. With NFTs, this is not a problem, as ownership is granted on the blockchain and every computer on the network can recognize its ownership. This factor greatly increases the subjective value of an NFT.
Brief summary of NFT technology
You might be thinking, "What makes this technology possible?"
Using the blockchain , it would take an absurd computer to guess and verify the hash (the encrypted algorithm) that would gain access to the keys owned by the token. Cracking the code would require insane computational power, making it impractical to crack. And when something is off in the digital ledger, it can be clearly seen as invalid over the network. This is what is known as a peer-to-peer platform. These platforms work without a central authority such as a government or bank. You would have to eliminate all computers and nodes from the network to destroy it. You only need a copy of the blockchain ledger for all transactions to be recorded. You might also aim to destroy all nodes to disrupt a widely used blockchain network.
NFTs are tokens built on blocks of unbelievably complex algorithms. Instead of a fungible cryptocurrency like Bitcoin, NFTs denote uniqueness and immutability, as mentioned previously. Each NFT is a digital signature written with a cryptographic algorithm, adding another dimension of uniqueness and scarcity. Once set to a specific digital weapon, property, creature, card, artwork, you name it, it is immutable. Immutability means the data can't be changed, forged, or altered. The transaction is encrypted on the blockchain and every single computer, or node, in the network takes note. If you have just node, with the blockchain ledger saved, you'll have all previously recorded data. Even if your computer spontaneously explodes, the data will be saved on other nodes.
It is extremely helpful to have a standardization protocol. The Internet uses the HTTP protocol. Website developers don't have to invent their own version of HTTP to build websites. They can use HTTP. Likewise, the blockchain and Ethereum ERC-721 on which most NFTs are built make it easy to create a standard for NFTs. The problem with this is that if the network fails, everyone will feel the effects. A common issue plaguing Ethereum today is the high gas fees required to create an NFT or sell it, making newer protocols like Cardano seem more attractive to investors.
How to make, buy and sell NFT art
If you're an artist who sees these digital artists making millions, then you might be wondering how you can get in on the action. Although some protocols like Zilliqa, TRON, Flow or Cosmos allow you to create your own NFTs, the defaults are on the Ethereum network. That's where the jaw-dropping sales numbers happen. The main markets to create these NFTs are Mintable, Rarible and OpenSea.
To create an account, you first need to connect a wallet, the most popular being Metamask. Here are some of the wallets that OpenSea allows you to use.
The app will allow you to create your collection to sell. You can take your NFT from another platform like Rarible or create an NFT directly in OpenSea. After creating your collection, you can choose the qualities of your NFT. This includes how many copies of the NFT there will be. To finally mint the NFT and put it up for auction, you need to pay a gas fee to get it up and running. Other markets like Superrare or Nifty Gateway are selective, like a regular museum gallery. These markets require you to submit your art or be invited to place a collection on the platform, rather than creating it yourself.
Whether you're on a platform that lets you mint NFTs or a platform you need to be invited to, an on-site marketplace lets you bid on NFTs. If you win the bid, you own NFT art.
The future of NFTs
With so many new protocols that will host NFTs, you can say this is just the beginning. It may seem absurd to say that we are only in the beginning stages of NFTs. Artists are already making personal fortunes with their art, but NFTs have only had wide adoption since 2017, less than four years. This year, NFTs finally outpaced Ethereum for a brief moment in search volume, but Ethereum is still not a familiar word compared to Bitcoin's ubiquity.
As a new protocol for Ethereum is set to reduce high summer gas rates and buyers continue to trade NFTs for hundreds of thousands of dollars, the NFT ecosystem is constantly changing and evolving. Soon, no one interested in the future of art will ignore this exciting innovation.
