This piece is a systematic introduction to NFTs (non-fungible tokens) to make newcomers feel less frustrated when dealing with this new technology. Based on the direction of the NFT market, I have summarised the technical system architecture, programming language of smart contracts, development tools, and listed several important NFT wallets.
In addition, I have also written about some relevant technical problems with references. I believe that this in-depth piece will be helpful for both researchers and developers, to understand the essence of NFTs.
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Recently, NFTs have garnered remarkable attention from the industrial and academic communities. A recent report shows that the 24-hour trading volume on average of the NFT market is $4,592,146,914—which is about 4.4% of the entire cryptocurrency market.
This demonstrates that NFTs are not only popular within the blockchain community, but also increasingly important for the future of business development. The liquidity of NFT-related solutions has accounted for 1.3% of the entire cryptocurrency market in a short period (five months).
Early investors obtain thousand-fold returns by selling unique digital collectibles. At the time of writing, the NFTs-related market has significantly increased compared to one year ago.
Specifically, the total number of sales is 25,729, and the total amount spent on completed sales comes up to $34,530,649.86. The total number of primary-market sales is 17,140 and the number of secondary sales (user-to-user) is 8,589.
What Does Fungibility Mean?
Since ancient times, humans have used money as a means of exchange. During the 1990s, new forms of money—such as credit cards and digital currency—were introduced. Since then, new types of currencies such as cryptocurrencies have also made their way into the world economy.
While all of these forms of money do vary greatly in their specific characteristics, they all share similar traits that define them as being fungible.
Fungibility is an economic term with a specific meaning. It refers to the characteristic of a good or commodity that is equivalent or identical to another unit of the same type. It also refers to the interchangeability between two units of equal value.
Consider two identical copies of “The Immortals of Meluha” by Amish Tripathi: it does not matter which one you own because both copies are equivalent and interchangeable with each other.
It does not even matter if you own more than two copies, since all copies belong to the same category, and are therefore, considered to be fungible. So, a ₹10 note and a ₹100 note are also interchangeable since they are both mediums for the same thing: purchasing goods and services.
So, What Exactly Is An NFT?
It represents a digital asset. You can think of it as a stock certificate. NFTs can represent anything that can be digitally represented: art, collectibles, or even a vote in an election.
A digital asset living on the blockchain is a little bit like a piece of trash sitting on a road: everybody can see it and nobody knows who owns it.
The mechanism for NFT creation relies on uploading a file onto an NFT auction market where the file is recorded on the digital ledger as an NFT, and can thus, be purchased or sold using digital currencies.
While the creation of an NFT that represents a piece of art can be exclusive to an artist, they can nevertheless retain the copyright to their work, and therefore, reproduce more NFTs underpinned by the same piece of art.
For this reason, a person who purchases an NFT does not necessarily gain possession of the original digital file, and therefore, does not have exclusive access to the file.
What Are Some Of The Problems With NFTs?
Once upon a time, there was a little-known section of the Internet called the “World Wide Web of Things”, and it made all manner of digital things available to anyone with an internet connection.
In 2018, this section became known as the “blockchain”, and everyone was very excited. People started buying things like cats and skateboards because they were on the blockchain. As you may have noticed, this excitement created some problems.
The most common problem in the blockchain world is a thing called the “origination problem”. This is when people buy NFTs that are not tied to real-world objects. For instance, a person can buy access to an imaginary cat or a skateboard on the blockchain, without knowing if they have real ownership over it.
So, if you buy an NFT from someone else who has no claim over the original object, you could end up with nothing but a file on your computer. One way to solve this problem is for all NFTS to be tied to real-world objects and people.
But then, you run into another problem: what if someone tries to steal your NFT? Sure, you could go to court and sue them for it (or whatever), but then you will run into yet another problem.
As NFTs become increasingly prevalent across the globe, there’s been a growing need for an international body to develop regulations and laws regarding NFTs. And, that’s exactly what’s happening now.
The Fungible Tokens Foundation (FTF) is seeking to determine the legal definition of NFTs. The development of NFTs has opened up a whole new world of possibilities, but it also brings with it a host of new legal and regulatory issues, that haven’t been dealt with before, in the same way as fungible tokens.
For example, there hasn’t been a clear definition of what an NFT is yet, or how NFTs should be treated by businesses or governments around the world. This has led to different countries taking different approaches to their regulation of NFTs—the UK, Japan, and the European Union are all leading the way, with varying degrees of regulation and legalisation.
This makes it difficult for other countries to follow suit because they have no precedent for how to classify NFTs within their laws. This is why the FTF has been created: to provide an international body for developing these rules and regulations.
NFTs Are An Innovation
When you think about it, the innovations that are happening in the blockchain world are pretty darn cool! With NFTs, you can use the power of code to create digital objects with unique signatures.
Instead of having one sad autograph on your yearbook page, you could have a whole series of signatures that are attached to digital images and other collectibles.
Also, when you digitise something, you can make a unique signature for it and keep track of its own on a ledger. This means that if you buy a digital item as-is (as opposed to creating it yourself), you can use the power of code to prove that it is yours.
What Is The Future Of NFTs?
As we all know, the NFT industry is still in its infancy, but as it continues to develop, the processes of creating and owning NFTs will become easier. This would be a boon to the digital art world, which has traditionally been difficult to navigate.
Because NFTs are so new, there aren’t many regulations or protections in place. But, this is all going to change soon. Soon, we’ll see a lot more people entering the market and trading NFTs.
People like an entrepreneur and digital artist, Beeple—who has made over $5,00,000 in crypto by selling his art as NFTs—are paving the way for others to follow in their footsteps. Already, several platforms have emerged where people can buy, sell and preview NFTs.
As these platforms continue to grow and become more popular, they will likely continue to expand their offerings and attract more consumers. This will create more opportunities for artists looking to take advantage of the benefits of using blockchain technology for digital artworks.
It’s a crazy world we live in, isn’t it? One minute you’re sitting quietly sipping your coffee at home, and the next you’re trading cryptocurrencies. A lot of people think that NFTs are just another, more complicated way to trade digital assets.
To be honest, it is a little complicated to understand how NFTs work at first. But, if you can wrap your head around the concept of crypto-collectibles and the idea of owning something unique and rare, then you will have a much easier time understanding what’s going on with NFTs.
While NFTs may be difficult to understand initially, they are beginning to gain popularity among different industries because of their potential to help preserve wealth and diversify risk, as well as because they are connected to art.
This marriage of cryptography, art, finance is proving to be very popular among NFT collectors. Many NFT collectors are taking NFTs one step further by turning their NFTs into Decentralized Autonomous Organizations (DAOs). This is just an example of how the potential of the NFT industry could affect society as a whole.
The future is here, and it looks like NFTs. The past few months have been exciting for the NFT community. While many people are still concerned about the implications of the metaverse and the rise of AI (artificial intelligence), it’s a future that’s full of possibility.
The future these NFT trends depict is an interesting one. It’s a future that bridges the gap between consumers and creators gives value and security to digital assets, and one that will shake up the world.
Introduction To The Metaverse
Think of the metaverse as the future. The metaverse is a concept of a persistent, online, 3D universe that combines multiple different virtual spaces. It’s like an advanced version of the Internet.
One important thing to understand about the metaverse is that it’s not fully come into existence yet. But, some platforms contain metaverse-like elements. For example, video games currently provide the closest metaverse experience on offer.
Video game developers have pushed the boundaries of what a game is through hosting in-game events and creating virtual economies. One reason why video games can be considered similar to the metaverse is that they allow you to interact with other players. There are whole communities built around these interactions!
Although not required, cryptocurrencies are a great fit for the metaverse. They allow for creating a digital economy with different types of utility tokens and virtual collectibles (NFTs).
The metaverse would also benefit from the use of crypto wallets such as Trust Wallet and MetaMask. Also, blockchain technology can provide transparent and reliable governance systems.
NFT Is The Way Of The Future
While NFTs are considered less than ideal by traditional investors, they are a boon to artists and collectors who have been longing for a transparent platform where these kinds of digital assets can be bought and sold, in bulk.
NFTs also offer owners an extremely precise way of tracking the value of their assets—something that is much harder to do with traditional collectibles. Overall, we think that owning digital art as NFTs is the way of the future.
Soon enough, we will see this market start to explode, and it will be a lot easier for people interested in buying, selling, or making digital art to do so. Also, explore the possibilities of a metaverse-like platforms and have fun doing it!
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BIBLIOGRAPHY:
1. Non-Fungible Token (NFT): Overview, Evaluation, Opportunities and Challenges.
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