Understand the definition and concept of NFT: A brief analysis of the meaning and characteristics of NFT

What are NFTs?

NFT (Non-Fungible Token) is the abbreviation of non-fungible token. It is a digital asset based on blockchain technology. Each NFT is unique and unique. Unlike traditional digital currencies, NFT represents a unique asset, which can be artwork, music, videos, game props, etc. The uniqueness of NFT gives it good collection value and trading properties, making it a popular digital asset investment method in recent years. This article will analyze the meaning, characteristics and application areas of NFT in detail to help readers fully understand what NFT is.

Fiat currencies and cryptocurrencies are both homogeneous currencies. For example, a $5 fiat note is interchangeable with another $5 fiat note, similarly, 1 Bitcoin is interchangeable with another Bitcoin, and 1 Ethereum is interchangeable with another Ethereum. , and so on. This homogeneity makes these currencies more convenient and fungible in transactions.

NFTs rely on special token standards such as ERC-721 to ensure uniqueness. Through blockchain technology, NFTs are non-fungible, verifiable uniqueness and scarcity.

Non-fungible tokens (NFTs) are simply unique digital assets. Unlike other tokens, each NFT exists alone and cannot be divided into smaller units. Unlike Bitcoin and Ethereum, the unit of NFT is always 1. Therefore, NFT has the characteristics of uniqueness and indivisibility.

From this perspective, NFT is like a digital version of a collectible or proof of ownership. Their value lies in their uniqueness and scarcity, and they can be traded and used on the Ethereum platform.

In 2017, the NFT ecosystem began to attract public attention with the launch of collectible projects such as CryptoPunks and CryptoKitties. Since then, a variety of new use cases and application scenarios have emerged in this space. According to data analysis by NonFungible.com, token sales in the NFT economy have exceeded $109 million to date, including $1 million in revenue last week alone! This shows that the NFT market is growing rapidly.

Different Types of NFTs

NFTs can tokenize almost anything, and various media types in particular are achievable goals. So far, the most common use cases of NFT are:

· Digital art (SuperRare, KnownOrigin, Async Art, Rarible, etc.);

· Digital music (Mintbase, InfiNFT, etc.);

· Virtual real estate (Cryptovoxels, Decentraland, etc.);

· VR wearables;

· Game assets (Axie Infinity, Sorare, Gods Unchained, etc.);

· Event tickets/admissions;

· Subscription badges;

· Blockchain domain names (Ethereum Name Service, Unstoppable Domains, etc.);

· Tokenization of luxury goods, such as wine, etc.;

· Tokenized insurance policies (yEarn’s yInsure token, etc.)

Create NFT: Start with a file

If you are interested in creating NFTs, you must first understand the medium clearly. NFTs can support a range of files, such as visual files (JPG, PNG, GIF, etc.), music files (MP3, etc.), 3D files (GLB, etc.), etc.

That said, start creating NFTs just like you would any other media file, whether it’s a JPG photo uploaded to your computer or a disco MP3 track created using music production software. Once the traditional file is ready, you just take the extra step of uploading it to the minting platform so it can be tagged as an NFT.

How to mint NFTs

There are already a series of NFT minting platforms in the Ethereum ecosystem, and they all have their own trade-offs.

First, there are DIY minting platforms like OpenSea, Rarible, InfiNFT, Mintbase and Cargo. Whether these assets are beautiful digital art, membership certificates, etc., these projects allow creators to mint their own NFTs easily and without permission.

In addition, especially in the field of digital art, there are some exclusive membership-based NFT minting platforms. Creators must first apply to and pass these platforms before they can mint. For example, SuperRare and Async Art are such projects.

Once you have your files and minting platform of choice, you will connect to your chosen Ethereum wallet, upload the files (similar to how you would on mainstream platforms like Imgur or Flickr) to the platform, and Fill in the subsequent description of the asset.

During this process, you can set whether you want to create an independent or version-based work, the royalty ratio of the assets, unlockable content, and more. Once these are ready, the minting process can be started, but a certain amount of ETH is required in advance for payment approval and minting transactions.

Note: Ethereum gas fees have remained high in recent weeks, and many NFT creators are facing extremely high minting costs. To deal with this situation, creators can 1) wait for the gas fee to be reduced, 2) wait for the layer2 expansion solution to be widely accepted, 3) or increase the NFT price to compensate for the gas fee.

About selling NFTs

Open market platforms like OpenSea and Rarible make it easy to sell NFTs across the ecosystem, with the former platform being particularly useful for auction formats.

To sell NFTs, you can connect your Ethereum wallet to the platform of your choice. If the NFT has been created, click and see a "Sell" prompt, and finally click and sign to complete the transaction. If you have collected other people's NFTs and want to sell them, the process is similar: click on the asset and follow the "sell" instructions, and you will get the benefits.

Questions about evaluating and collecting NFTs

How much should you pay for an NFT, or how much should you sell an NFT for? There are no right or wrong answers here, but there are some key concepts to remember.

If you are just experimenting, then pricing is obviously not that important. If you are keen on the ROI of NFT activities, then you will want to be more granular with the price you buy or sell. If this is the case, you need to remember that prestige, rarity, and provenance are key. For example, a 1:1 NFT from a famous artist is more valuable than a version NFT from a lesser-known creator.

NFT projects have floor prices. You can use platforms such as OpenSea to measure the lowest price of these products, hoping to bid at or above this mark. Pay close attention to trading volume and trading activity. Projects with higher activity provide more profit opportunities.

Please remember that the motto “not your keys, not your crypto” applies equally to NFTs. That's why it's really important to pay attention to safety issues while collecting them. The best practice is to store NFTs in a hardware wallet (or across multiple wallets) where they cannot be easily attacked.

Conclusion

Now is a period of booming NFT economy. The NFT market is ushering in tremendous development. We may even see explosive exponential growth in the industry. . Combined with the fact that several recent projects have experimented with NFT DeFi, it’s easy to see NFTs continuing to increase in utility and popularity from here.

Of course, compared with DeFi, the scale of the NFT field is still relatively small, but it has empowered today’s creators in unprecedented ways. NFT supporters cannot hide their ambitions and expectations: NFT will reshape the gaming field; NFT will transform the traditional collectibles market; NFT can even have an impact on the traditional real estate industry. Of course, there will be critics who will pour cold water on this: NFT is still just a niche hobby in a small circle. It lacks unified standards and does not have large funds entering the game. It will take a long time for NFT to develop and mature.

Over time, more and more artists and innovators have leveraged these tokens to realize their unique properties and, in turn, expand in new ways. In addition, with the popularity of Ethereum, platforms other than Ethereum will further turn their attention to NFTs.

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