Blockchain technology regularly surprises society with its use cases. In 2021, NFT is trending – a technology that can affect the interaction of the real and digital worlds. Moreover, NFT contributes to the dissemination of blockchain ideas, their introduction to a wide range of users. The truth of this statement is confirmed by the daily news about the release of music albums of famous artists in the NFT format, the transfer of famous works of art to the digital world. Popular retailers in Ukraine sell digital food drawings in the format of non-fungible tokens.
What is a non-fungible token
NFT stands for Non-fungible token. The implementation is based on Ethereum smart contracts. The first application was recorded in 2017 in a simple game CryptoKitties.
At the heart of all digital assets is distributed network technology. This is a kind of database distributed over all computers connected to the network. This is the main principle – decentralization, the absence of a single governing center (centers). Thanks to the blockchain, you can get rid of intermediaries in carrying out various operations.
Token is a record in a chain, a digital unit. In the standard sense, all tokens are fungible. NFT is an exception to the rule, each token is unique, non-fungible. This quality provides great opportunities for protecting property rights, confirming the uniqueness of a digital or tangible asset.
Thanks to NFT, it became possible to tokenize any product. Tokenizing real items is a complicated procedure, but in the digital world, this is not difficult. Most often, tokenization is subject to:
- works of digital art;
- artifacts in computer games;
- items in virtual worlds;
- other objects.
Areas of Using NFT
Thanks to NFT, the digital asset becomes decentralized. You can confirm the ownership of the object, its originality. In this case, a picture or a music file can be downloaded to any computer, printed, listened to in the player. But the ownership of this asset belongs to the owner of the token.
The scope of NFT applications is vast, ranging from the gaming industry to digital art.
For example, games use a variety of items, from weapons to players. Tokenization of these items will greatly facilitate the procedure for acquiring rights and further sale.
In art, NFT literally creates a revolution in values and approaches to monetizing the products of artists and musicians. Collectors pay special attention to this area. With the help of smart contracts, it is possible to program the creator of a painting to receive a percentage of the profits each time it is resold, considering his right as an author. Among the main sites for tokenization of works of art:
- OpenSea and others.
One of the separate areas of application of non-fungible tokens in the digital world is virtual universes. In this environment, NFT will provide tremendous opportunities for development.
NFT has an impact on collecting. Going digital just got a lot easier. Now digital items have gained more value. The well-known auction house Chhristie`s on March 11, 2021 sold at an online auction the collage of the popular artist Michael Winkelmann (known as Beeple) “Daily: the first 5 thousand days” for $69 million with a starting price of $100. The collage is implemented digitally and tied to the NFT token.
Minting – release of your own NFT
can use various resources – Rarible, OpenSea, MintBase, InfiNFT and others. The first two options are the largest resources on which non-fungible tokens are sold. In the case of using Rarible, the minting commission will have to be paid immediately, while the token may not be sold, then the creator will incur losses. On OpenSea, the commission is charged at the time of the token sale. Accordingly, the fact of creating a token (a record of this in the blockchain) is carried out during the sale.
Prospects for the development of technology
The main direction of further development of NFT, implementation in real life is the sphere of copyright. In particular, we are talking about streaming technologies, rights to audio and video files. Analysts of world cryptocurrency projects highly appreciate the prospects for the development of NFT, the expansion of the scope.
Blockchain and NFT reduce the risk of document fraud. A diploma or certificate in a non-fungible token format has a high chance of success.