Do you wonder what NFTs are, whose popularity has increased significantly in 2021 compared to the previous year?
NFTs simply means unchangeable tokens and are one of the types of cryptography token that represent ownership of rare assets such as artworks or collectibles.
In economics, interchangeability is explained as a commodity in which each unit is interchangeable and indistinguishable. A fiat currency like the US dollar is a good example of an exchangeable product. For example, if you have a $ 5 bill, you can exchange your banknote for Donald’s banknote without affecting Donald. On the other hand, Donald’s favorite and limited edition basketball card is a good example of a non-replaceable product. These cards qualify as a collectible card and each has its own distinct features. One player’s card and another player’s card usually do not have the same value. Moreover, there are points where even 2 cards that are exactly the same differ from each other. One of the best examples of this may be the date of manufacture of the cards.
Another example of something that cannot be changed is a work of art. A sample picture is usually created as a single original copy. Now that we are entering non-replaceable products, we can start talking about NFT’s contributions in this area. Each NFT generally has completely different features that exist within it.
Source : pixabay.com
Also, most NFTs are rare and the number of NFTs with only one circulating is quite high. In addition, the provability of this situation is very easy thanks to blockchain technology. Meanwhile, NFTs cannot be split into other parts, so you cannot buy or sell some of your NFTs. Similar to standard tokens, NFTs guarantee ownership of the asset and can be easily transferred.
Ethereum and NFTs
Even though NFTs can be implemented in any blockchain that supports smart contracts, the most notable examples of NFTs are the ERC-721 and ERC-1155 standards running on Ethereum. Before diving into NFT standards, let’s take a look at what the ERC20 is.
ERC-20 is a widely used standard for creating tokens on the Ethereum blockchain. Examples of ERC-20 tokens are stable coins such as USDT and DAI, and DeFi tokens such as LEND, YFI, SNX, and UNI. Unlike NFTs, the ERC-20 standard allows the design of interchangeable products.
ERC-721 is a common standard for generating tokens that cannot be changed. ERC-721 explicitly allows for creating contracts that can be used to create distinctive tokens with different characteristics. The best example of ERC-721 is CryptoKitties, a game that allows raising virtual kittens.
ERC-1155 is considered the next step in the creation of NFTs. This standard allows creating contracts that support both exchangeable and non-exchangeable tokens. So in a game like this standard World of Warcraft, it can allow a player to keep both non-replaceable items and replaceable items such as sword, shield, armor.
Speaking of NFTs and CryptoKitties, there are a few other hugely popular games that take advantage of the power of NFTs, such as Decentraland and F1 Delta Time. Decentraland, for example, is an example where players can buy digital land parcels that they can then sell and use for in-game advertising.
In addition, F1 Delta Time, which entered the year well in 2021, is a game that makes track pieces that allow players to organize digital Grand Prix and sell them into NFT. If we look at other examples, marketplaces for digital artworks such as Rarible and SuperRare have also taken their place in the market.
By the way, we should not pass by saying NFT, because some NFTs can be extremely costly. An NFT named CryptoKitty Dragon was sold for about $ 170,000 at the end of 2017. Even rare domains like Exchange.eth can be worth up to $ 500,000.
