What is NFT?
NFT stands for ‘non-fungible token’, and most of these assets can be secured on the Ethereum and Solana ecosystems. Other blockchains are also slowly gaining market share with their version of NFT smart contracts.
To understand NFTs, first, we should explain FTs; In simple terms, FT (fungible tokens) are issued in bulk in one smart contract, and all tokens have equal value. Ie. If 1 million UNI tokens are circulated, all UNIs are of the same value. The market determines the token valuation, similar to any fiat currency; therefore, all FTs are called cryptocurrencies.
NFT, on the other hand, has a different type of smart contract where each token can have a unique value. It can be a series of artwork, a group of collectables, a membership to blue-chip communities etc. And the NFT tokens can be stored in digital wallets like any cryptocurrency. As a unique token, the valuation is also unique to that particular asset. Similar to a rare coin, art piece or membership in a prestigious club.
As an example, you could issue a series of collective digital art under the label of ‘4 Seasons’ as one specific smart contract, which will be limited to 4 different images. Each image will have a unique design, so the market may decide to pay more for the ‘summer’ version than the ‘winter’ version. Ultimately, the true value of NFT comes from the market’s interest towards that particular smart contract; e.g. a famous artist like ‘Beeple’ or a membership for a blue-chip community group like ‘CryptoPunks or BAYC communities’. Each smart contract representing a community group has a restricted token allocation (generally between 5000 and 10000). Therefore, the value of each token (community membership) will be determined based on market demand.
Even though the NFT concept originates back to 2014/15, in mid-2021, the NFTs have become insanely popular amongst Ethereum chain users globally, attracting artists, collectors, gamers and traders… With its sudden popularity as a new community-based web platform, there have been mind-blowing transactions for millions of dollars for a single token to secure membership for some blue-chip communities. By late 2021, Solana had also gained popularity with new types of community-based projects that offer high high-level incentives (referred to as utilities) due to its low transaction fees (compared to Ethereum).
With the growth of the NFT market, in addition to cryptocurrencies, blockchains are now regarded as the new age internet platform; hence it’s called web3.
Industry experts project that the actual value of the NFT market will be when people start to tokenise other mainstream items, like shares, real estate, derivatives etc.
Time will show.
Note: If you are new to the NFT marketplace and want to explore your options, we suggest you use our NFT tips to guide you on a safe pathway to enjoy your journey. There is no advice on what to buy; it just guides you on how to plan/buy/secure and sell your choice of NFTs.
Ethereum NFTs: opensea.io
Solana NFTs: magiceden.io
Cardano NFTs: jpeg.store
Leading NFT related Crypto Projects