NFT stands for non-fungible token. NFT represents a digital entity, that is cryptographically unique, non-interchangeable such as drawing, video, or anything.
In the series of open source blockchain platforms, we have published many blog posts that include introductory and tutorial articles such as Top 5 Free Open Source Crypto Wallets in 2021, How to Set up Ethereum Node On Localhost | Beginners Guide, and some more. With the rise in blockchain technology, many of the latest developments are distributed ledger-oriented. It has been the first choice due to some powerful characteristics such as openness, security, transparency, and robustness. Now, let’s talk about the NFT. What is NFT? NFT is a non-fungible token and it is stored in a distributed ledger called a blockchain. Most of the time, it is Ethereum blockchain that supports the transactions of NFTs.
In this blog post, we will go through non-fungible tokens by covering the following points.
What is NFT?
Non-fungible tokens are digital representations of data and data could be in any format such as a video file, audio file, movie ticket, drawing, or any social media comment or post. The name itself is explanatory that it is a token that is linked with any asset and contains ownership rights of that asset. Moreover, no one can interchange these digital assets and non-fungible in nature. Let’s take the example of fungible and non-fungible things. You can interchange your $10 note with two $5 notes which means money($10 note) is fungible and the same is the case with BTC or other cryptocurrencies that are interchangeable and contain the same value. Whereas, you cannot interchange a painting, or any art because you cannot denominate art. However, these digital assets are unique and have only one owner at a time.
These tokens contain complete information from their creation time to the last transaction. In addition, it is more like buying or selling ownership rights of digital or physical assets. There can be many copies of a painting but the real file will reside under the ownership of an owner. Therefore, it can be sold or bought for an amount of money using secure channels such as blockchain. At this stage, we have an idea of what is NFT and we will go through the linkage of non-fungible tokens with the distributed ledger that is open source in nature. However, you can read more about blockchain and popular open source blockchain platforms in this space.
NFT and Distributed Ledger(Blockchain)
Non-fungible tokens are backed by blockchain technology just like cryptocurrencies. Every NFT resides on a digital distributed ledger that is publically available to everyone. The information about a particular token is available on the blockchain such as the owner of the token, creation date, and all transactions records. All the tokens are safe and secure as the digital ledger is shared among all the participants and there is no chance of forgery and other fraud. In the initial times of the non-fungible tokens, the Etheruem blockchain was supposed to handle the NFT transactions. Ethereum is open source and provides many enterprise-level provisions. Above all, the Ethereum blockchain platform also lets developers write smart contracts to govern the NFT transactions.
However, the interested buyers can verify the authenticity and ownership of a non-fungible token. Once NFTs are created, they are then going through a minting process in which these tokens become part of the blockchain. So, these token are ready for trade once the minted process is completed. There is an equal opportunity for everyone to create, sell, and buy NFTs over the distributed ledger. There are auctions in which people trade of NFTs take place for millions of dollars. Visit this space to learn about Ethereum and other open source blockchain platforms.
Crypto and NFT
NFT is a widely used term in recent times as it is very much linked with crypto technology. People use cryptocurrency or even digital currency to buy and sell these unique and non-interchangeable tokens. There is a difference between cryptocurrency and digital currency. Digital currency is the digital form of conventional physical money whereas cryptocurrency is mined and encrypted currency operates on the blockchain. However, there are both choices that buyers and sellers can go for.
In this section, we will go through some of the following popular NFT marketplaces.
OpenSea: This is the largest NFT marketplace that offers NFT of a wide range of things such as GIFs, videos, games characters, and many more. It lets you set up your wallet, create NFTs and enlist them for sale. The NFT trade volume of this marketplace is recorded more than $10 billion up to this. month(i.e Nov 2021) since its launch.
Axie Marketplace: It is another popular NFT marketplace where the trade volume of NFTs is in millions of dollars. In addition, the trade volume of this marketplace is more than $3 billion since its launch.
CryptoPunks: Just like other marketplaces, it is one of the big non-fungible tokens marketplaces. Interested people can explore this marketplace as the trade volume is more than $1.5 billion.
Similarly, there are some other platforms where you can do NFT trading.
This brings us to the end of this blog post. Hopefully, this article will help you understand the basics of non-fungible tokens. We addressed some questions such as what is NFT? The relation of distributed ledger and NFTs. However, there are some other blockchain platforms and tutorial guides mentioned in the “Explore” section below.
You may find the following links relevant:
- Hyperledger Fabric
- ConsenSys Quorum
- How To Setup ConsenSys Quorum Blockchain Network Locally
- Top 5 Open Source Blockchain Platforms In 2020
- A Basic Guide on How To Create Ethereum Smart Contract
- How Decentralized Technology Upgrades Your Business Strategy
- How To Setup ConsenSys Quorum Blockchain Network Locally