NFT (irreplaceable token) is probably the most confusing commodity on the Internet at present. The most basic meaning of NFT is the computer code representing the ownership of digital goods. But what does this mean? Why did their value suddenly explode?
From 2020 to 20021year, how will the global NFT sales increase by 30,000% to reach1300 million USD? Will you miss (or avoid bullets) if you don't invest?
This article is a comprehensive introduction to NFT. We will give an overview of NFT, how they work and their application in the real world. We will also show you how to create, buy and sell NFT successfully.
Quick summary: What is NFT? Before we fully define irreplaceable tokens, we need to be familiar with some key concepts. Let's talk about the difference between replaceable assets and irreplaceable assets.
Replaceable asset "replaceable" is a word you rarely hear in conversation, but the general idea is simple: when something is replaceable, it means that it can be exchanged or traded for the same item with the same value. For example, if I have an unopened soda, I can exchange it for the same soda. This can of soda can be replaced. Physical currency and bitcoin are examples of alternative assets. This means that they have three characteristics: they can trade and exchange $ 1, and they can trade with another $ 1 because their values are equal. 1 bitcoin is equal to 1 bitcoin. For physical currency, this trading system is effective because everyone agrees with it. The value of bitcoin is stored in the blockchain (explained below).
There are obviously other factors when deciding what is a replaceable asset, but in order to understand NFT, these are the three most important concepts.
Irreplaceable assets are different from physical currency and bitcoin because they are irreplaceable. From the most basic point of view, this means that each non-financial asset has a completely unique value and cannot be easily traded or exchanged with another non-financial asset (unless the two parties concerned decide to enjoy the same value, this situation may never happen).
1 ft does not automatically equal 1 other NFT. They can have very different values, which are completely subjective and unique to a particular NFT.
If I order a customized birthday cake for my friend, I can't go back to the bakery for a different cake, because my cake is unique. Similarly, if I am the owner of NFT, I have a unique digital project that cannot be replaced by the same project. You ask, why are these all important? Because of this, every NFT work has become a unique collection and is truly valuable. How much is it worth? This is very different. NFT can represent the ownership of anything, from GIF files (yes, some of them are actually owned by people), a work of art, an element of video games (such as characters or clothes) and even a piece of real estate.
Blockchain NFT is stored in the blockchain. These public ledgers record the existence and ownership of each token and cannot be changed in the future. NFT stands for ownership of physical or digital items. Each NFT is an encrypted asset with a unique identification code and metadata, which makes it different from other NFTs.
We will discuss this later, but for now, it is important to understand that blockchain records are immutable. This means that when someone owns NFT, whether it is physical or virtual, it is formal.
Blockchain is an anonymous, unchangeable and publicly accessible journal (public ledger) that records transactions in chronological order. The blockchain is decentralized, and the information of online transactions is stored in batches. Decentralization, called "block", describes an organization in which operational and management power is delegated from the central authority to several smaller groups or individuals.
When you buy things in the real world, what's the point of NFT-such as cakes-it has unique properties and limited quantity. Receipts, contracts, or just having an item can prove that you own it.
The Internet doesn't allow you to own digital objects like physical objects. NFT should bring some structures applied in the physical world to the digital world, so that the number of digital assets will be scarce and different from each other. Advocates of NFT also say that they provide the security of "proof of ownership" needed online.
Although this is correct in theory, it also has limitations. Non-financial transactions are not regulated and legally binding contracts are not signed. So far, whether NFT can provide the same proof of ownership as the actual receipt has not been verified in court.
NFT can conduct person-to-person sales through different NFT markets in exchange for cryptocurrency. NFT Market is an online platform that allows you to buy, sell and create NFT.
Cryptographic currency is a decentralized digital currency protected and created by encryption technology. Now, NFT is used to represent virtual objects in S3 games, such as art trading cards and other collectibles, including clothes and money of characters in the game, virtual land in music metadata * video footprint legal document S3 signature 3 tokenized real-world assets, such as car contracts, real estate or sports shoes.
As the internet becomes more and more decentralized, NFT supporters hope that they will be used for more and more things. However, NFT has serious problems, including serious environmental impact, security issues and financial risks.
*MetaverseA virtual space where users can interact with the environment and others. Metauniverse combines the functions of social media and games. They usually use virtual reality (VR) and augmented reality (AR), which can be built on the blockchain.
How does NFT work? Now that we have introduced the basic principles of NFT, let's have a deeper understanding of their working principles.
NFT is an encrypted asset. This means that they are protected by encryption, such as bitcoin, Ethernet and other cryptocurrencies. However, unlike cryptocurrencies, NFT is not used for commercial transactions.
Cryptography is a method of encoding information to ensure communication security. Encryption technology only allows the sender and the recipient to view the contents of the mail.
The working mode of blockchain is a blockchain, which is very important to the working mode of NFT and one of the most confusing parts of this story. But once you connect these ideas together, everything will make sense.
They are called blockchains because they are composed of computer code strings (called blocks) and then linked together. Each data block is encrypted (that is, information is encoded by encryption) and has storage capacity.
Once a block is full of data, it will be closed and the data in it will be permanently recorded.
Create new blocks to record the next batch of data, and each new block is linked to the previous block, thus creating a blockchain. This is different from the traditional database that stores data in tables.
Create new blocks through a process called mining. Usually, blockchain miners must solve complex encryption algorithms to create new blocks. Mining takes time and a lot of computing power. When miners' blocks join the chain, they will get economic returns.
Blockchain is used to publicly record transactions. Each blockchain is stored on multiple computers linked in a peer-to-peer network. This means that all computers in the network can share files. This decentralized information sharing is the reason for establishing blockchain trust.
Every computer in the network has a copy of the blockchain. To change the information stored in the blockchain, the blockchain must be decrypted first, and then the information on each computer in the network must be changed at the same time.
Because each blockchain is maintained by its user network, they can save secure transaction records without the need for central organizations and manpower to record, store and maintain data.
People believe in the accuracy of blockchain because the storage method of these data is almost impossible to operate.
How NFT market works NFT buys, sells, stores and displays goods on an online platform called NFTMarkets. NFT market is similar to Yi Bei and other e-commerce platforms. Users list their NFT, and buyers can bid. These online platforms are different from cryptocurrency exchanges, where users buy, sell and trade currencies such as Bitcoin or Ethereum.
NFT market usually supports multiple blockchains; Users can only trade NFTs based on supported blockchains and use cryptocurrencies compatible with these NFTs.
Most NFTs are stored in Ethereum, which means that these NFTs are compatible with the NFT market based on Ethereum. NFT purchased with ether on one platform can be sold on another platform.
Only a few markets accept traditional currencies such as the US dollar. These markets will automatically convert tenders into appropriate cryptocurrency.
How NFT was created The process of creating NFT is called coinage. Most NFT markets allow you to choose NFT, and there are several specialized NFT casting websites. To create NFT, just upload the digital file to NFTmarketplace, fill in some details, and then click Create. You can convert most digital files to NFT, including images, videos and GIFs.
Attributes of non-financial transactions Non-financial transactions have some important attributes, such as uniqueness, scarcity and tradeability, which make them play a role.
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