Non-Fungible Tokens (NFT): Beginner’s Guide
Non-fungible tokens, or NFTs, are indivisible and verifiably unique digital assets. They can be used to represent tangible and intangible elements.
Cryptocurrencies, utility tokens, value tokens, privacy tokens… digital assets and their classifications multiply and evolve alongside blockchain technology.
Non-fungible tokens (NFTs) are another example of the rapid change in the industry. In this guide we explore what they are, how they work and how they are being used.
Non-Fungible Tokens
What are non-fungible tokens?
Digital assets known as non-fungible tokens store distinct data in smart contracts.
It is this information that makes each NFT unforgeable, and as such, it cannot be directly substituted by another token. They cannot be exchanged for other identical ones, since no two NFTs are the same. The bills, on the other hand, can simply be exchanged one for another; If they have the same value, there is no difference for the holder, for example, between one dollar bill and another.
Bitcoin is a fungible token. You can transmit and receive Bitcoins with others, and you will always own some. (Of course, the value of Bitcoin may change during the exchange.) You can also send or receive smaller amounts of a Bitcoin, measured in satoshis (think of satoshis like a Bitcoin’s cents), when fungible tokens are divided.
Non-fungible tokens are not divisible, just as you can’t send someone half a concert ticket. A portion of a concert ticket would be worth nothing on its own and would not be redeemable.
Collectible CryptoKitties tokens were among the first to be non-fungible. Every blockchain-based digital kitten is distinct; if you send one to someone and then receive one from someone else, the two will be entirely different. than the one you sent. Collecting different digital kitties is the goal of the game.
A non-fungible token’s unique data, like that of a CryptoKitty, is irreversibly recorded on the token’s blockchain and kept in its smart contract. CryptoKitties were originally launched as ERC-721 tokens on the Ethereum blockchain, but have since migrated to their blockchain, Flow, to make it easier for newcomers to the cryptocurrency to access.
What makes NFTs so special?
Non-fungible tokens have unique attributes; They are usually tied to a specific asset. They can be used to prove ownership of digital items, such as game characters, or even ownership of physical assets.
Similar to coins or banknotes, other tokens can be exchanged for one another. Fungible tokens are identical, having the same attributes and value when exchanged.
How are non-fungible tokens used?
As for cryptocurrencies like CryptoKitties, non-fungible tokens can be used for digital assets that need to be differentiated from each other to demonstrate their value, or scarcity. They can represent anything from virtual land spaces, works of art, to property licenses.
Non-fungible tokens are not traded on standard cryptocurrency exchanges but are instead bought or sold on digital marketplaces such as Openbazaar or Decentraland’s LAND marketplace.
How do NFTs work?
Tokens based on Ethereum, such as ERC-20 tokens, and Bitcoin, are fungible. The Ethereum non-fungible token standard, used by platforms like CryptoKitties and Decentraland, is ERC-721. Non-fungible tokens can also be created on other smart contract-enabled blockchains with non-fungible token tools and support. Despite being the first extensively utilised, NEO, EOS, and TRON now have NFT standards. Ethereum was the first.
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Non-fungible tokens and their smart contracts allow you to add detailed attributes, such as the owner’s identity, metadata, or secure file links. The power of non-fungible tokens to immutably demonstrate digital ownership is an important advancement for an increasingly digital world. They may see the promise of trustless security offered by blockchain extended to practically any asset’s ownership or trade.
Much like the blockchain challenge to date, non-fungible tokens, their protocols, and smart contract technology are still developing. The creation of decentralised applications and platforms for the management and creation of non-fungible tokens is still relatively complicated. There is also the challenge of creating a standard. Blockchain technology development is dispersed, with numerous developers focusing on their own projects.Success may require unified protocols and interoperability.
How to buy NFT tokens
Non-fungible tokens can be purchased on a large number of NFT marketplace, such as Rarible, OpenSea, and Enjin Marketplace.
Here we explain how to get your first NFT with Rarible:
Step 1: Go to the Rarible website and click the “Connect” button on the top right. Choose the Ethereum wallet from this list to link it to the platform, then log in.
You will have to accept the terms of service before you can access .
In our example, we will connect using Metamask , a popular web and mobile wallet.
Step 2: Once logged in, search the platform for the NFT you want to purchase.
In our example, we will show how you could purchase Jango’s “Hand of Fate” artwork. The process will be similar regardless of which NFT you want to purchase (assuming it is available for purchase).
Once you have selected the NFT you want to purchase, click the “Buy Now” button.
Step 3: A confirmation window will appear asking you to double check the order details.
If you agree to continue, click the “Proceed to Checkout” button to proceed to the last step.
Step 4: Next, a window will pop up from your wallet asking you to confirm the transaction. Again, if you agree to continue, simply confirm the transaction and it will be processed.
Once confirmed, your NFT will be deposited directly to your Ethereum address and will be yours.