10 Things You Should Know About NFTs

10 Things You Should Know About NFTs

Non-fungible tokens, or NFTs, are a new type of digital token that is unique and not interchangeable with other tokens. These tokens can be broken down into non-replicable assets on the blockchain such as CryptoKitties, unique digital art such as Ascending, and non-repeatable collectibles such as CryptoRivers. Leveraging this new technology has opened the doors to applications we never thought were possible. NFTs unlock massive potential in both gaming and non-gaming use cases. Here are 10 things you should know about NFTs:

What is an NFT?

A non-fungible token (NFT) is a digital token that represents something unique, like a rare baseball card, a painting, or a piece of land. Tokens that can be exchanged between any two people are called fungible tokens. Fungible tokens are like generic, interchangeable items that can be broken down into smaller parts, like gallons of oil in a tank. You can sell 5 gallons of oil, or a gallon of oil every day at the same price as the other gallons of oil in the tank. NFTs are like an individualized item, like a signed first edition copy of a book, or a rare tulip bulb.

Where can we see NFTs in the future?

- Gaming: NFTs are perfect for the gaming industry, where they can be used to tokenize in-game assets, create unique collectibles, and even bring virtual items to life!
- Digital Art: We are already seeing digital art and creative projects implemented with NFTs as a means to give unique pieces of art a virtual presence.
- Publishing: Making unique, one-of-a-kind copies of books with NFTs is becoming more popular, and it is also possible to create personalized editions with unique content, images, and dialogue.
- Real Estate: Similar to the baseball card example, NFTs can be used to tokenize real estate, enabling fractional ownership of
real-world assets.

How do NFTs work?

NFTs work by assigning a unique token to each asset and storing that data on a decentralized network. Each token is associated with a specific asset, such as a digital art piece, a video game character, or a real estate property. All tokens are non-fungible, meaning that no two tokens can be substituted for each other. Tokenizing assets with NFTs also means that each asset is secure, since it is stored on a decentralized network. This decentralized network is secure because it runs on a distributed network of computers all over the world, which cannot be hacked.

Types of NFTs

There are three types of NFTs - Unique, Singular, and Inseparable. Each type of token is used for different applications, and each has its own unique set of benefits. Unique Tokens are one of a kind, with no two tokens being the same. Unique NFTs are well-suited for items like collectibles, where there is only one of each item. Singular Tokens are the same as Unique Tokens in that there is only one of each token, but there are other tokens of the same type that are interchangeable. Singular NFTs are like rare baseball cards; each card is one of a kind, but there are other cards of the same type that can be used in place of the rare card. Inseparable Tokens are similar to singular non-fungible tokens in that there is only one of each token, but the token cannot be broken down further. Inseparable tokens are like markers on a map, where there is only one marker of each type, and it cannot be broken down into smaller units.

Why use NFTs?

- Ownership: NFTs allow ownership of unique items that can be transferred with ease. - Security: By tokenizing real-world assets, such as land, art, and collectibles, on the blockchain, owners of these assets can ensure that they are secure. Owners of these assets don’t need to worry about someone stealing their land or art work, since they own the token. - Accessibility: Another advantage of tokenizing real-world assets is that they can be made accessible to people around the world. Owners can create digital versions of their item, like a video game character, and make it accessible to people anywhere in the world. - Liquidity: Another benefit of tokenizing real-world assets is that owners can sell the digital tokens for cryptocurrency, which can then be exchanged for cash. You can sell your tokenized land, art, or collectible for Bitcoin, which can then be sold for cash.

How are NFTs different from traditional tokens?

Traditional tokens are fungible tokens that can be exchanged between any two parties. You can exchange one gallon of oil for another gallon of oil. NFTs, on the other hand, are non-fungible tokens that are unique and cannot be broken down into smaller units. In other words, NFTs are like gallons of oil, where they are all different, while traditional tokens are like a barrel of oil, where the barrels are the same.

Benefits of NFTs

- Ownership: NFTs allow ownership of unique items that can be transferred with ease. No longer do you have to worry about losing an item or having someone steal it. If you own the token, you own the item.

- Security: By tokenizing real-world assets, such as land, art, and collectibles, on the blockchain, owners of these assets can ensure that they are secure. Owners of these assets don’t need to worry about someone stealing their land or art work, since they own the token.

- Accessibility: Another advantage of tokenizing real-world assets is that they can be made accessible to people around the world. Owners can create digital versions of their item, like a video game character, and make it accessible to people anywhere in the world.

- Liquidity: Another benefit of tokenizing real-world assets is that owners can sell the digital tokens for cryptocurrency, which can then be exchanged for cash. You can sell your tokenized land, art, or collectible for Bitcoin, which can then be sold for cash.

Where to store NFTs

When you acquire an NFT, you will typically receive a digital wallet that is compatible with the token. Some wallets can store multiple tokens, while others can only store one type of token. It is important to do your research and find the right wallet that suits your needs. Some common wallets used to store NFTs are MyEtherWallet, Trust Wallet, and CryptoKitties. You should store your wallet offline, on a secure computer that is not connected to the internet. This keeps your tokens safe as they will not be accessible by hackers.

Downsides of NFTs

NFTs are an exciting new technology, but they are still in their infancy. There are a few things to keep in mind before you begin tokenizing real-world assets. Ownership: While the tokenizing process does provide the owner of the token with ownership of the real-world asset, it does not give them the legal title of the asset. In other words, owners of the token cannot decide who can use the asset and who cannot, but they can sell and trade the asset as they please. Security: While NFTs are more secure than traditional methods, they can be hacked. Hackers only have access to the token, so they cannot access the real-world.

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