What are NFTs?
NFTs are tokens in a blockchain that we can use to represent ownership of digital assets like art, collectible, or even real — estate. They are secured by blockchains and can only have one owner at a time. The record of ownership cannot be modified or copied and pasted as a new NFT. The term non-fungible describes unique which means they are different from each other and cannot be exchanged with other items. In a blockchain items like NFT tokens are uniquely identifiable items, they are different from cryptocurrency and Altcoins since they exist as fungible items where their value defines them rather than their unique properties.
For Example- Ethereum (ETH) can be exchangeable for Solana (SOL) whereas, an NFT cannot be exchangeable for another NFT.
The NFTs are also a form of a digital ledger that provides proof of ownership or a certificate of authentication to its assets while creating a digital footprint on a blockchain network.
THE NFT REVOLUTION-
Non-fungible tokens or NFTs solve some of the problems that exist on the internet today. There is a need for a cryptographic footprint of digital assets of physical items like scarcity, uniqueness, and proof of ownership. Thus allowing NFTs built on blockchain technology to become digitally unique. NFTs are compatible with anything built using blockchains like Ethereum and Solana. For a Blockchain platform, NFTs can be in the form of different unique assets like
A unique digital artwork
An in-game item
A digital collectible
A domain name
A ticket that gives you access to an event or a coupon
They exist as a unique piece of digital data on the blockchain where users can assign or claim ownership of the item. The NFT is minted from the above digital objects as a representation of digital or non-digital assets.
HOW DOES NFT WORK?
NFT’s are minted through smart contracts written on blockchains that assign ownership and manage the transferability of the digital asset. When someone creates or mints NFT’s on a blockchain platform, they execute codes stored in the smart contract that conforms to standards that revolve around transaction, ownership, and total supply. This information is added to the blockchain where NFT is being managed. The minting process of NFT involves creating new blocks which can also mean creating new NFT’s, validating information, and recording information into the blockchain.
An NFT standard in a blockchain represents that the digital asset is unique and has a different value from other tokens in a smart contract. This could be due to its properties like age, rarity, or even something like Visual.
Ethereum ERC-721 — All NFTs have a uint256 variable called tokenId, so for any ERC-721 Contract, the pair contract address, uint256 tokenId must be globally unique. That said, a dApp can have a “converter” that uses the tokenId as input and outputs an image of something cool, like zombies, weapons, skills or amazing kitties!
Solanas Metaplex- Metaplex is a protocol built on top of Solana that allows: Creating/Minting non-fungible tokens; Metaplex is comprised of two core components: an on-chain program, and a self-hosted front-end web3 application. Metaplex is actually not a single contract, but a contract ecosystem, consisting of four contracts that interact with one another. Only one of the contracts (Metaplex) actually knows about the other three, while the others represent primitives in the ecosystem and do not interact with each other at all.
NFT has seen exponential growth in platforms like Decentralized Finance (DEFI) where NFTs like Art are being used as collateral. An art that you would have bought back in the day could be worth 1000 dollars at today’s price. the NFT’s can also be sold in the marketplace as shares which gives investors and fans the opportunity to own a part of NFT without having to own the whole thing.
