Today, the use cases for NFT applications are broad, including: collectibles, games, art, virtual assets, tokenization of real-world assets, and more. NFTs also provide the flexibility to store, control, and protect personally identifiable information.
Chapter 1 Getting to Know NFTs
What is NFT?
NFT, the full name of Non-Fungible Token, refers to a non-fungible token, which is the only cryptocurrency token used to represent digital assets (including jpg and video clips).
In the real world, there are no two commodities that exhibit completely similar characteristics or values, so they are called non-homogeneous commodities, which refer to unique and irreplaceable commodities. Similarly, digital assets with individual uniqueness held on some blockchains (mainly Ethereum, but also other blockchains such as Matic, Flow, Wax, etc.) are called non-fungible tokens . In the real world, real assets have ownership certificates. Similarly, in the blockchain world, NFT tokens can maintain ownership records and proof of authenticity (in another way, it is a digital item with a unique signature authentication, a virtual digital world. real estate certificate). NFTs are mostly stored in suitable digital wallets such as MyEtherWallet and Ledger Hardware wallets, which are easy to customize and trade in the market.
NFTs are not newcomers. In 2012, the first NFT-like token built on the Bitcoin network, Coloured Coins, aka Bitcoin2.x , was launched. But the most common NFT is the ERC 721 protocol based on Ethereum. In addition to this, there are other protocol standards such as ERC 1155 developed by Enjin.
Each NFT differs in both value and properties. Each token has a digital hash that distinguishes it from other tokens; therefore, NFTs can serve as proof of provenance. More and more people are realizing the value of NFTs, which can not only prove the ownership and authenticity of intellectual property rights such as original artwork and game tokens, but also represent real assets such as stocks and real estate. In the field of games and collectibles, NFTs are also known as digital collectibles.
Not only do NFTs exist in the digital space, but more importantly, they can also represent any type of physical asset. As a kind of “digital twin”, NFTs can connect with anything that exists in the real world and realize physical objects in the digital marketplace Ownership of assets changes hands and is traded.
The difference between NFT and FT
After reading this, you must have noticed that you are curious about the constant mention of terms such as “homogenization”, ERC-721, ERC-20, etc. If you’re not sure what they mean, this chapter will take you there.
To understand non-fungible tokens, first, let us clarify the difference between Fungible Token (FT) and Non-Fungible Token (Non-Fungible Token).
Most of the crypto assets that have been traded for a long time, such as BTC and ETH , are homogeneous tokens. In simple terms, a homogenized item or token is, for all intents and purposes, interchangeable with another unit of the same thing. For example, one bitcoin equals another bitcoin, just like one dollar equals another dollar. Dollars can be exchanged simply, even if the serial number is different, it does not affect the replacement, and if the value is the same, the denomination of the banknote makes no difference to the holder.
The same is true for homogenized tokens. There is no difference between one bitcoin of the same type and another bitcoin, the specifications are the same, and there is unity. In a transaction, just pay attention to the number of tokens handed over, its value may change according to the time interval of the exchange, but its essence does not change. A homogenized token is a token that can be replaced, unified, and can be split infinitely.
Familiar tokens are very convenient to use, but things that have real value in real life are irreplaceable, such as a contract, property rights, works of art, birth certificates, etc. Therefore, non-fungible tokens came into being.
Unlike homogenous items, non-fungible items or tokens are not interchangeable with each other, they have unique properties that, even if they look similar, are fundamentally different from each other.
Collectible games such as CryptoKitties use new non-fungible tokens. Non-fungible tokens contain identifying information recorded in their smart contracts. This information makes each token unique and therefore cannot be directly replaced by another token. They cannot be exchanged for one because no two NFTs are the same. In addition, most non-fungible tokens are also indivisible, just like a part of a concert ticket that cannot be given to others, part of the ticket is not valuable and cannot be exchanged.
The unique property of non-fungibility makes it usually tied to a specific asset, which can be used to prove the ownership of digital items (such as game skins), or even the ownership of physical assets, mainly used in the field of games and encrypted collectibles.
A major difference between FT and NFT is the use of different contract interfaces. The token protocol used by the former is ERC-20, and the latter is ERC-721.
Key Features of NFTs
After reading the first two sections, perhaps you already know a thing or two about what makes NFTs unique. The following will give you a detailed introduction to the main ten characteristics of NFTs:
- Uniqueness: NFTs contain information on the properties of the token in its code, making it different from other tokens. Encrypted digital artwork may have encoded information embedded in each pixel, and encrypted game items may have many details at the bottom, allowing game clients to understand the items owned by the player and their properties. One of the key differences between traditional cryptocurrencies (fungible tokens) and non-fungible tokens is that each NFT is unique and complete and cannot be directly linked to any other asset through identity, value and/or utility exchange.
- Traceability: Every NFT has a transaction record on the chain, from creation to changing hands. Every token is verifiable to prove authenticity and prevent fraud – which is critical for owners and potential buyers!
- Scarcity: NFTs have scarcity, which is one of the biggest attractions for NFT players and buyers. This is not only conducive to the long-term development of encrypted assets, but also will not have hidden dangers such as short supply.
- Indivisible: The vast majority of NFTs are indivisible (a small number of NFTs that can be split will be explained later), just like half a concert ticket cannot be sold.
- Programmability: Like all traditional digital assets and tokens built on smart contract blockchains, NFTs are fully programmable. Both the CryptoKitties and Axie Infinity projects have introduced breeding mechanisms to encode tokens. Every non-fungible token is composed of metadata that gives each token different characteristics, including size, owner name, scarcity, and more. So the potential of NFTs is unlimited.
- Ownership: NFTs combine the best features of decentralized blockchain technology with non-fungible assets.Unlike ordinary digital assets, which are issued and regulated by centralized entities, NFT encrypted assets can be taken as they are used and can also give the owner true ownership; true ownership is one of the key components of any NFT. As the digital economy continues to develop, there is no doubt that NFTs will play a key role in bringing the digital and physical worlds closer than ever.
- Transferability: Since NFTs are decentralized, there is no need for a central issuer, and there is no third-party intervention, which also makes their transfer easier (direct transfer between individuals). For example, in the field of games, NFT solves the exclusivity problem in traditional games, because assets can be easily transferred between different blockchain games. Assets that users build or buy in NFT games are owned by the user personally, not the game company, so they can be transferred between different virtual worlds and can be carried from one game to another.
- Standardization: Traditional digital assets do not have a unified expression, but by displaying non-fungible assets on the public chain, developers can build universal, reusable, and inheritable standards for all non-fungible tokens.This includes basic primitives such as ownership, transport, and simple access control.
- Liquidity: The extremely fast tradability of non-fungible assets will bring about an increase in liquidity. The NFT marketplace can cater to a wide variety of audiences, ranging from strictly professional traders to less sophisticated novice traders. Just as the ICO boom of 2017 spawned a new class of assets powered by instant liquidity, NFTs expand the unique marketplace of digital assets.
- Interoperability: A non-fungible token standard allows NFTs to move easily across multiple ecosystems. When developers start new NFT projects, these NFTs are instantly viewable in dozens of different wallet providers, and can be traded on the market, as well as displayed in the virtual world because the open standard is read and write Data provides a clear, consistent, reliable and permissioned API.
The three major protocol standards of NFT
The ERC-20 protocol is an earlier and more popular token specification protocol in the Ethereum blockchain, and it is the protocol standard for homogenized tokens.
Up to now, most of the non-fungible tokens are also created on the Ethereum blockchain, mainly forming the following three standards:
- ERC-721 – the earliest standard, each token requires a separate smart contract.
- ERC-1155 – pioneered by the team of Enjin Company, which proposes a semi-homogenization scheme for NFT.ERC-1155 allows one smart contract to handle several types of tokens. For example, such contracts can contain both homogenized and non-fungible tokens, greatly improving transaction efficiency.
- ERC-998 – New and evolving standard that allows the creation of “synthesizable” tokens, and digital assets that “own” another digital asset. This is an extension to the ERC-721 standard, enabling ERC-721 tokens to own other ERC-721 tokens and ERC-20 tokens. For example, in a computer game, ownership of a game character represents one non-fungible token, while ownership of character equipment represents another token. ERC-998 allows users to combine the two into one token.
Note: In addition to Ethereum , there are NFT standards on NEO, EOS, TRON, FLOW, Binance and COSMOS blockchains.
The standardization of NFTs is crucial, especially in terms of interoperability. Standardization allows this non-tradable token to be transferred between different Dapps. Furthermore, the issue of liquidity has been resolved due to the development of the blockchain and Ethereum ecosystem. The problem of selling and buying is handled by marketplaces such as Rarible or Sorare.
A major difference between FT and NFT is the use of different contract interfaces. The token protocol used by the former is ERC-20, and the latter is ERC-721.
The following is a detailed introduction of several protocol standards:
The ERC-20 protocol is an earlier and more popular token specification protocol on the Ethereum blockchain. If both tokens on the Ethereum platform are issued in ERC-20, they can be freely exchanged between them. ERC20 is a standard token interface that specifies its basic functions and is convenient for third parties to use. The open source system makes the ERC20 standard so simple that an ERC-20 token can be issued in 5 minutes. ERC-20 tokens are under the command of the same set of token contracts, which means that all tokens in the ERC-20 protocol can easily implement functions such as transfer, request, approval, etc., but their functions are also limited.
NFT projects typically use the ERC-721 standard to issue NFTs. ERC-721 has similar properties to ERC-20. The similarity between the two is that digital asset information is kept on the same blockchain. The key difference is that ERC-721 allows tracking of ownership records for assets that have unique characteristics.
Compared with ERC-20, ERC-721 protocol has more functions and more advanced technology. The protocol is Ethereum’s first standard for NFT digital assets with non-fungible tokens, and is used in projects such as CryptoKitties and Decentraland . The ERC721 standard was created and released by Dieter Shirley, CTO of CryptoKitties, who can be said to be one of the founders of NFTs.
Although ERC-721 has fewer use cases than ERC-20, and its functions are still being explored, its advantage is that assets (paintings, bonds, houses or cars, etc.) under the ERC-721 protocol can ensure the security of ownership and ownership. Ease of transfer and immutability and transparency of ownership history. In addition, ERC721 can also facilitate tracking, trading, trading and management of real assets, and more. As game virtual assets continue to become popular, 5G and VR continue to popularize, and equipped with blockchain technology, the 721 protocol has a bright future.
- What is ERC-1155?
Compared to ERC-20 and other standards, the ERC-1155 token protocol standard stands out in how it is cross-chain compatible. So far, most of a user’s assets have only been available on the Ethereum blockchain, however the ERC-1155 standard also makes their assets compatible with other ecosystems, and being able to operate across multiple blockchains seems to be the only way forward.
- How does ERC-1155 work?
ERC-1155 backing these custom tokens with the native Enjin coin ensures that all assets created through this method have a guaranteed value that can be obtained by using the native “melt” feature within the Enjin wallet, making tangible value acquisition is more direct.
ERC-1155 is very different from traditional tokens and cannot be destroyed directly. Instead, they usually remain in circulation unless the original developer regularly buys them back. ERC-1155 is positioned as a more specific token standard in that any asset can be created and destroyed at any given time.
The benefit from this is token scarcity. In the ERC-20 protocol, scarcity is almost non-existent. Under the ERC-1155 protocol, the destruction of assets can reduce the circulation, improve the overall scarcity, and provide a different type of token protocol than traditional options.
ERC-998 can create a composable and synthesizable NFT (Composable NFT, abbreviated as CNFT). It is designed so that any NFT can own other NFTs or FTs. When you transfer CNFT, you transfer the entire hierarchy and affiliation that CNFT has. Simply put, an ERC-998 item can contain multiple ERC-721 and ERC-20 items.
As mentioned above, in computer games, the ownership of a game character represents a non-fungible token, and the ownership of character equipment represents another token. Although character equipment belongs to the character, this affiliation cannot be reflected under the existing ERC-721 system; if you want to trade, only the character and the equipment can be traded separately. ERC-998 allows users to synthesize the two into one token. The synthetic parent token contains the ownership relationship of the two child tokens of characters and equipment, so as to make it easier to package and sell, and greatly simplify the transfer of items. deal with.
The rise of NFTs
In 2009, after the establishment of Bitcoin, Litecoin, Ripple and other token types were initially launched, but people hope that blockchain technology can continue to innovate and create more powerful tokens.
The first NFT-like token, Bitcoin 2.X (also known as colored coins), was born in 2012. Since then, NFTs have continued to grow, dating back to the Rare Pepe Directory project launched by Counterparty.io in 2016 and the CryptoPunks pixel portrait project launched by John Watkinson and Matt Hall in 2017. The real boom in the NFT field began at the end of 2017, and the CryptoKitties launched in the Ethereum boom in early 2018 caused people to pay attention to NFT activities soaring. A groundbreaking innovation of the game is that users can create new NFTs: simply breed two kittens together. Their descendants will have different rarities, which determine the market price of new NFT cats. After that, many projects began to try the breeding mechanism of NFT, the most interesting of which is Aavegotchi, which combines the DeFi service Aave mechanism and tamagotchi toy elements.
However, when the market crashed in 2018, interest in NFTs also dwindled, or even stalled, and at the end of 2020, there was a resurgence in NFTs. In terms of market capitalization, the market capitalization of the NFT industry increased by 17% in 2019 and by 50% by the end of 2020. In less than two years, NFTs have created a total value of over $200 million from nothing.
The NFT data analysis website NonFungible.com shows that since September 2020, the number of NFT sales has increased significantly and has maintained a high level of growth. The first week of September 2020 saw NFT sales approaching $1 million, with blockchain-based fantasy football card game Sorare surpassing $211,000 in sales, and the momentum shows no signs of slowing down. In the first week of December 2020, NFT transactions totaled nearly $2 million. According to CoinGecko data, the market capitalization of NFTs has surpassed its 2020 forecast, reaching more than $550 million.
As Facebook, Microsoft, NVIDIA, BATJ and other large and small companies and governments of many countries began to publicly announce the layout of the Metaverse, the popularity of NFTs and the Metaverse reached a climax.In the long run, the Metaverse will be the result of the continuous integration of many independent tools, platforms and worlds supported by shared infrastructure, standards and protocols; and NFT, as an important element of it, is not only an extension of real assets, but also a native virtual world The starting point of assets will become a token representing identity, assets, rights, and various attributes.
From the birth of colored coins in 2012, to the end of 2021, NFTs are popular all over the world; after ten years of development, NFTs no longer need to rely on the encryption market to survive, but can be attached to various fields and applied in different scenarios. As the understanding of the potential and value that NFTs can provide becomes more widespread, more and more big brands, major investors and venture capital firms are taking notice and participating. Although the future road of NFT faces challenges, as a new young field, there is still room for overall growth. We look forward to more new NFT projects to open our imagination, and we look forward to this industry with bright development prospects getting more and more Much recognition!
How to quickly become an NFT insider? Inventory of 33 community terms (in slang)
There are many terms, abbreviations, confusing slang and intentional misspellings circulating in the NFT circle, leaving many “noobs” just starting out. Some of them are essential knowledge to step into the NFT circle, others are just “boring” slang.
This article will introduce 23 important entry-level NFT terms and 9 nonsense industry jargon. I hope you can feel the joy of truly becoming an NFT insider after mastering these terms.
Entry-level NFT terminology
10k project (10k project) refers to an NFT collection consisting of about 10,000 avatars. In 2017, the CryptoPunks collection of collectibles pioneered this type of NFT project. To date, new collectibles are emerging from such NFT projects. It is worth mentioning that this term refers only to this type of avatar collection and does not specify the exact number of avatars, so not all such NFTs consist of 10,000 avatars.
When you receive an airdrop, your wallet will automatically receive a certain amount of a certain digital asset or new NFT without you paying any fees. This practice is not only popular in the digital asset world, but has also become a popular way for NFT projects to incentivize early holders, such as new artworks that can be used as NFT airdrops.
Apeing (into something)
This term has nothing to do with 10k projects like Bored Ape Yacht Club that are themed around the Bored Ape. “ape into something” refers to FOMO (Fear of Missing Out), spending money that your account cannot support, and/or investing blindly without thorough research on the project.
Avatar project (Avatar project) basically has the same meaning as 10k project, referring to collections containing thousands of NFT “avatars”, such as CryptoPunks, Bored Ape Yacht Club, Cool Cats, Gutter Cat Gang, etc.
Burn refers to the destruction of NFTs. For example, if only 5,000 pieces of collectibles originally scheduled to consist of 10,000 NFTs are sold, the development team may decide to “burn” the remaining 5,000 NFTs; for example, some projects allow token holders to “burn” two NFTs Mint a new, rarer coin.
DAO (Decentralized Autonomous Organization) refers to “Decentralized Autonomous Organization”. When you hold an NFT in a project such as Head DAO, you, like other holders, gain voting rights and governance rights over the future actions and overall direction of the project. Many NFT projects are building similar structures, thereby strengthening community dynamics and ensuring long-term support.
Diamond hands is one of the most popular slang terms in digital assets and NFT circles. It has its own emoji and emoji, and even became the theme of the entire NFT project. People with “Diamond Hands” are not afraid of market fluctuations and insist on holding positions when negative news is rampant, market sentiment is sluggish, or when they encounter FUD in the digital asset circle (see Article 9 for specific definitions).
In the English context, Diamond hands can also be used as a verb, such as “She diamond-handed bitcoin through the 2018 bear market.” (ie “She held on to the 2018 bear market.”)
The Floor or Floor Price of a project refers to the lowest price for purchasing any NFT in the project on the secondary market. Floor is the most popular metric to track the performance of a project over time, or to measure the project’s performance compared to other projects.
FUD (Fear, Uncertainty, and Doubt) means “Fear, Uncertainty, and Doubt”. In digital asset and NFT circles, the term is used to describe inaccurate or outright false negative news stories, tweets, and Discord messages, among others.You will often see people blaming FUD for causing NFT prices to plummet.
Gas (miner fee) refers to the fees incurred for transactions on the blockchain. When you buy NFTs on a blockchain like Solana, the gas is negligible. However, on Ethereum, the gas fee can be as low as $50, depending on the complexity of the network transaction. The lower the complexity, the lower the cost; the higher the complexity, the higher the cost.
Built on the basis of gas, the gas war ( miner fee war) can be described as a bloody storm. Gas war is so common in Ethereum that it has almost become a kind of “welcoming ceremony”. Once a well-known NFT collectible is launched, you will compete with 100,000 people for 10,000 NFTs, so you have to increase the gas fee to win the transaction at a higher price than others. This is called a gas war.
Generative art is arguably one of the key innovations in digital art and collecting in recent years. Well-known collections such as the Bored Ape Yacht Club, Cool Cats, Sup Ducks and Pudgy Penguins are all derived from generative art. There is plenty of good quality material for further reading on this concept.
In a nutshell, the NFTs in each collection have certain characteristics in common: clothing, skin or coat color, eye shape, headgear, and background color, to name a few. 20 different outfits, 20 different pairs of eyes, 20 different backgrounds… By mixing and matching these features, it is possible to create a collectible collection of 10,000 unique NFTs. While these raw features are drawn by humans, each NFT is automatically generated by a computer through a random combination of all optional traits. This process is thus defined as “generative”.
In short, understood from a non-technical point of view, the metadata of an NFT basically includes all the necessary and unique data that makes the NFT unique. The most interesting point is that metadata defines the appearance of a piece of art or collectible. This is also why you have to refresh the metadata on OpenSea to see what your newly minted NFT will look like.
When you buy a brand new NFT from the issuer, you are minting (minting) the NFT. Minting refers to the process of creating this NFT on the blockchain.
MM (MetaMask) is the most popular NFT wallet in the Ethereum ecosystem.
OS (OpenSea) is the largest NFT trading market on Ethereum.
Paper hands (paper hands) and diamond hands (diamond hands) mean the exact opposite, a term that is frequently used in the NFT circle, but not limited to the NFT circle. It refers to someone selling something, such as a digital asset such as an NFT, at a price that others think is too low.
Paper hands can also be used as verbs, as in “Someone just paper-handed a Cool Cat for 6 E!” (ie “Someone just sold a Cool Cat for 6E!”)
PFP is the abbreviation of profile picture, and its meaning is the same as the 10k project and avatar project introduced above. The term was born from the fact that avatars in such projects are often used as personal photos on social platforms such as Twitter and Discord.
In the context of NFTs, the meaning of the word reveal may be quite different from our general perception. In a newly released generative project, the artwork is usually not actually created until the NFT is minted, so you don’t know exactly what you’re buying until you buy it. In other words, art is only revealed after it has been purchased. The creators behind the collectible can decide whether to reveal it immediately, after the collectible is sold out, or 24/48 hours later.
Rugpull is a classic scam in which the developers behind a seemingly legitimate project swipe all the money after the project is launched and disappear from the scene. You might get an NFT in return, but it’s likely worthless or even untradeable on the secondary market, so be wary of getting caught up in a rugpull.
In the English context, Rugpull is also often used as a verb, such as “I got rugpulled” and “I got rugged”. You can also see some people using the word “rug” on Discord, usually to spread FUD within the community of a particular project.
Snapshot is related to the airdrop described above. Often a team will take a snapshot at some point in time to determine eligibility for an airdrop. For example, it is stipulated that Snapshot will be taken at 4:00 pm on November 11, Universal Standard Time (UTC). At this time, everyone who holds NFT X in the wallet will receive free NFT Y next week.
The term sweeping is often used out of interest in the project floor. Sweeping refers to buying a large number of NFTs at the lowest price in a collection of collectibles on the secondary market. Some teams sometimes do sweeping on their own initiative or at the request of the community for their own projects. In addition, individuals known as whales may also perform sweeping.
Whale (giant whale) refers to people who hold large sums of money, either yet to invest or have invested in high-priced NFT projects. Therefore, anyone with a thousand E or 200 Bored Apes in an account would be considered a whale. Whale’s presence plays a major role in its ability to move the market in both directions by buying or selling specific collectibles in bulk.
Diamond Hand/Paper Hand
Diamond hands usually refer to holding a certain NFT firmly, as firm as a diamond; able to withstand risks, and at the same time have a higher probability of obtaining high returns, which is suitable for optimistic about the long-term operation of a certain project party.
Contrary to paper hands and diamond hands, it usually means that you cannot hold a certain NFT firmly and tend to buy and sell quickly; although it is difficult to obtain exaggerated profit orders, the risk is low, and it is suitable for bear markets or optimistic about the short-term popularity of a certain project.
Easy Moments: Read abbreviations and “typos” and become an insider in no time
In addition to the above 23 important NFT terms, there are some nonsensical but important industry jargon. Let’s find out together!
Ded is a misspelling of Dead, which can be used to refer to items being rugpulled.
GM is the abbreviation of good morning. You can see this word on Twitter and Discord 24 hours a day, reflecting the global nature and friendly atmosphere of the NFT scene.
GN stands for good night, and you can use it at will.
GMI is also an extremely popular acronym, along with derivatives WAGMI and NGMI. GMI (Going to make it) means “successful harvest”. WAGMI (We’re all going to make it) means “We can all be successful”. NGMI (Not going to make it) means the exact opposite, meaning “not going to make it”. By using these terms as often as possible, you can establish yourself as a true NFT connoisseur.
Hodl is an old-fashioned term in the digital asset world, originating from an investor GameKyuubi. He declared “I AM HODLING” on the forum after prices fell about 40% in 2013, mistakenly spelling hold as hodl. People in the digital asset industry often use this term to indicate that they will continue to hold positions no matter what the situation is, which is somewhat similar to the diamond hands introduced above. Hodl was later given the meaning of Hold On for Dear Life.
LGF (Let’s fucking go!) can be understood as “Chongchongchong”, which is often used to express excitement about the launch of new projects and NFT news.
Moon is also a frequently used market term in the NFT space. Going to the moon/ mooning refers to a large increase in asset value. No specific definition of the increase has been made yet, but for the digital asset world, which has seen Bitcoin rise from $1 to $6, a 10% increase is certainly not worth mentioning.
Ser evolved from sir, often ironically. In other words, if someone uses ser in a sentence, don’t take it seriously.
Wen is a misspelling of when, which is often used by the NFT and digital asset community to express irony. For example, “Wen moon?” can be interpreted as “When will the price of this asset skyrocket?”
The original text comes from “23 NFT Terms You Need to Know”
Summary: NFT 17 Q&A
Question 1: What is a non-fungible token (NFT)?
The full name of NFT is Non Fungible Token. Chinese is a non-homogeneous token. Different from the homogenized form of Bitcoin, the characteristics of NFT are unique. It is a unique and easy-to-verify digital asset, which can represent GIF, picture, Assets such as videos, music albums, etc. In fact, everyone may have known about NFTs a long time ago. For example, the popular game in 2017, CryptoKitties, paralyzed the Ethereum network, and the price of an NFT kitty was as high as 600ETH. And the recently popular NBA Top Shot are good examples.
Question 2: What are the characteristics of NFT?
The properties of NFTs make each NFT unique and authentic, which solves a big problem in the art and luxury industries. For example, LV is preparing to launch NFTs to prove the authenticity of its luxury goods, or to track the life cycle journey of an individual handbag.
Another feature is that ownership belongs to the user. In traditional games, for example, the player doesn’t really own anything in the virtual world. However, in blockchain games, the assets in the game are owned by the players. Even if the game is down or the server is shut down, the players still hold NFT assets, which can also be converted into tokens for use in other games.
In theory, anything that exists online can be purchased as an NFT. NFT is “a cryptographic token”. Ryan Duffy, author of Emerging Tech Brew, explained that the biggest difference between NFTs and cryptocurrencies is that NFTs are non-fungible, they are not interchangeable or divisible. Think of Pokemon cards, while each card can be traded, they are inherently different, and by comparison, one bitcoin is essentially the same as another and is interchangeable.
Question 3: Why have NFTs?
One of the reasons for buying NFTs is their sentimental value. In this respect, NFTs are not much different from physical objects, unless the buyer is a complete utilitarian and only cares about the physical value of the commodity. In real life, no one buys lip gloss out of pure necessity, and everyone buys it largely because of the joy that lip gloss brings to them. The same goes for GIFs, pictures, videos or other digital assets. Another important reason to buy NFTs is that it has room for appreciation, and you can make more money by buying and reselling NFTs.
Question 4: How to buy NFT?
This process varies according to the platform used. There are many NFT trading markets on the market, such as OpenSea, KnownOrigin, Rarible and so on. On Top Shot, for example, you need to sign up to join a waiting list that may already have thousands of NBA fans. When a digital asset goes on sale, you are randomly selected to buy it.While Top Shot accepts both U.S. dollars and cryptocurrencies, some platforms only accept cryptocurrencies, such as OpenSea.
In general, there are four common methods, namely:
- Buy potential NFT tokens on major trading platforms;
- buy and sell NFT assets;
- Become a crypto artist and issue your own NFT;
- Staking NFT liquidity mining.
Buying tokens of the NFT concept and buying NFTs are actually two different things. If you want to simply invest in the NFT track, you can buy leading NFT tokens such as ENJIN, MANA, SAND, etc. on major exchanges.
If you want to participate in the NFT collectible market, or buy and sell NFTs to earn the difference, a general NFT marketplace like OpenSea provides a channel to buy various NFT assets. In addition, there are NFT platforms dedicated to crypto art, such as SuperRare and Nifty Gateway. If you want to know more about how to use the platform, you can add researcher Sophia (ID: lovebit98) to ask.
Question 5: How to participate in NFT liquidity mining?
There are many NFT projects combined with liquidity mining, such as Aavegotchi. Users can mortgage Aave’s tokens to get ghost-image NFT tokens, and the collateral behind this NFT token is an interest-earning token.
On Aavegotchi, users can obtain small ghost images by staking atoken (equity tokens on Aave), and each small ghost is an NFT token. What is special about Aavegotchi is that the collateral behind the little ghost, atoken, is an interest-earning token, and the value of the collateral will grow over time.
Question 6: How to determine if the purchased NFT is genuine?
The ownership of NFTs is recorded on the blockchain, which is decentralized and exists in encrypted form on the computers of many people. In order to avoid buying counterfeit products, you should check the source of NFT when you buy it. Take OpenSea as an example, check whether the NFT you intend to buy comes from the official store opened by the project on the platform. Generally, popular projects will be officially certified by OpenSea. Secondly, you can also find out which project or which artist the NFT you want to buy comes from through social media. The project party and the artist usually choose to promote it on social media, and everyone can buy from the link they share.
Question 7: Are NFTs new?
NFTs have exploded recently, but they are not new. According to Andrew Steinwold, the origin of NFTs can be traced all the way back to the Blockchain-backed Colored Coins in 2012, and the CryptoKitties boom in 2017 led to people rushing to buy CryptoKitties, and NFTs really became mainstream.
Question 8: What are the application scenarios of NFT?
“Everything can be NFT.”
The application range of NFT is also very large. We know that most assets in the real world are non-fungible assets, and if these assets are to be listed on the chain, or to find the corresponding digital form, then NFT will be the most suitable standard, so we firmly believe that this is the blockchain in the The second largest application scenario outside of finance.
NFTs can be applied to digital artworks, collectibles, in-game items, virtual worlds, sports competitions, fashion entertainment, identity verification, insurance, infrastructure such as domain names, digitization of physical assets, e-tickets or coupons and other application scenarios. Games and digital art can be said to be the two main application scenarios of NFTs.
NFTs based on blockchain technology can record the status and achievements of players in the game. In-game items such as weapons, equipment, characters, etc. can become NFTs, and NFTs can ensure the ownership verification and authenticity of game items. CryptoKitties, Axie Infinity, and Aavegotchi are all gaming use cases for NFTs.
Digital art is another mainstream application of NFTs. Each piece of art can be presented in the form of NFT, artists can ensure their copyright to the work, buyers can verify the authenticity of the purchased artwork, and the intervention of middlemen is no longer required, and encrypted artists can earn more. SuperRare, OpenSea, and MakersPlace, among others, are crypto-art use cases for NFTs.
Question 9: Are there any specific use cases for NFTs in gaming?
Take the NBA TOP Shot, for example. NBA TOP Shot is a very popular NFT card game recently.
The reasons for the popularity of the NBA TOP Shot game can be divided into three parts.
- One is the aggregation of sports fan effects + digital collectibles. The cards are mainly the iconic actions of NBA star players, which have a very sticky audience, so it is natural that such digital version of the star cards are popular. Since these star cards are all sold in limited quantities, teams with a larger number of fans, such as the Lakers, and highlights cards of popular stars such as James and Curry are generally more expensive.
- The second is the trust endorsement of Dapper labs, the same team of CryptoKitties.
- The third is the emotional push of fomo. In fact, this is the commonality of digital collectibles – the sooner you enter the market, the more profitable it will be. For example, some football cards with a cost price of only $230 will sell for around $100,000.
Flow, also developed by Dapper labs, is also very popular recently. It is a public chain specially created for the entertainment and cultural industry.
This kind of collectibles project is currently an NFT investment direction, and general projects will use the scarcity of NFT + fan effect to attract audiences.
Question 10: How to buy NFT encrypted artwork?
NFT art trading platforms include SuperRare, MakersPlace, and Known origin. Each piece of art can be presented in the form of NFT, artists can ensure their copyright to the work, buyers can verify the authenticity of the purchased artwork, and the intervention of middlemen is no longer required, and encrypted artists can earn more.
For those who want to buy NFT artwork, but don’t know which platform to buy on, you can click this article. This link has a detailed analysis of six popular NFT trading platforms, such as the types of collectibles traded on the platform, the Comparison of features and commissions.
Question 11: What are the mainstream NFT trading platforms?
OpenSea is currently the world’s largest NFT trading platform, established in January 2018. It covers a wide range of NFT categories, integrates NFTs from various platforms, and sells them at more favorable prices. It is currently the most used trading platform by mainstream NFT players. In terms of transaction volume, OpenSea ranks first.
Rarible was founded in 2020 and released the governance token RARI on July 15th, allowing the most active creators and collectors on Rarible to vote for any platform upgrade and participate in governance and auditing. At present, there are 6932 collectors on the platform, which can be regarded as a mainstream trading platform. When it comes to the number of traders, Rarible maintains its lead.
SuperRare specializes in trading those ultra-rare artworks. This is an NFT marketplace for trading unique digital artworks. The platform is characterized by advanced management, simple experience, flexible payment methods, social profiles and mobile APP, and can conduct real-time auctions.
Question 12: What are the NFT standards?
Different blockchains have their own NFT standards. On Ethereum, common NFT standards include ERC 721, ERC 1155 and ERC 998 protocols. On the WAX blockchain, the common ones are SimpleAssets and AtomicAssets protocols. Among them, the most common standard for non-fungible tokens is ERC 721. CryptoKitties, founded in 2017, was once the first star project of NFT, but what many people do not know is that the ERC 721 standard is exactly what the project CTO Dieter Shirley created. Created and published, it can be said that Dieter Shirley is one of the founders of NFTs.
Question 13: What are the NFT tokens?
Many NFT projects have launched their own native tokens. For example, MANA is the token of Decentraland, and Flow is the token of the NFT public chain platform launched by Dapper Labs.
In addition to holding the currency to rise, some NFT tokens can also be used to purchase land, goods and services in the virtual world and pay platform fees. Rarible’s RARI token can be used for governance, management and voting on featured artworks.
Question 14: How is the rally of NFT tokens?
In the previous round of sharp falls, Bitcoin fell from $58,000 to less than $45,000, and most tokens were affected, such as sushi, uni, and link. Several of the coins with the smallest decline and the fastest rebound in this round of big drops are coins with the NFT concept. To give a few examples, Sophia bought MANA for 50 cents last year, and it has increased more than 10 times now.
Question 15: How to create your own NFT?
Some NFT creation platforms aim to make it easy for anyone to create NFTs, regardless of whether they have the development skills to deploy smart contracts. The NFT trading market usually also provides tools or tutorials to guide users to create their own NFTs. For example, trading platforms such as OpenSea and MintBase also provide their own creation tools.
For example, the Mintabse and Mintable platforms make tools that allow ordinary people to easily create their own NFTs. Mintbase is based on ERC721 to create NFT. The gas fee required to mint NFTs on different platforms ranges from $2 to $32.
The OpenSea platform also supports the creation of NFTs, and it is completely free, and users do not need to pay fees to deploy smart contracts. Click “Create” in the upper right corner of the website to start creating.
Now, OpenSea has released gas-free NFT maker, creating and selling NFTs without paying any gas fees.
Question 16: How to evaluate NFT projects? Is there any reference standard?
- The first is the quality of the project and the reliability of the project party. Because the threshold for NFT issuance is extremely low, and it is easy to be imitated and copied, attention to the influence of the issuance team affects the judgment of subsequent transaction potential.
- The activity level of the community. NFT is more dependent on market activity than DeFi, so sneaking into the community and observing the discussion heat in the community is one of the evaluations to indirectly measure whether the issuance and trading of NFT is likely to be profitable. And it’s not enough to compare the number of people in the community. The number in the community is easy to be faked. You should pay attention to the discussion on this in the community.
- Market transaction records. These historical transaction data can be found on the Nonfungible website, which is publicly visible after all. It is worth noting that the evaluation of NFT projects is not based on the assets for sale on the platform, because the scarcity and uniqueness of NFTs determine the constantly changing market evaluation criteria for each asset.
- Unlike homogenized tokens, NFTs also have aesthetic judgment requirements. There are many shoddy NFT artworks on the Internet that need to be identified by themselves.
- The scarcity of NFTs themselves. For example, the total number of CryptoPunks is fixed at 10,000. Unlike CryptoKitties which can be generated indefinitely. As the NFT industry continues to expand, the scarcity of CryptoPunks themselves will make them even more valuable. In the last quarter of 2020 and the first two months of 2021, sales around CryptoPunk have reached tens of millions of dollars.
Question 17: What is the development prospect of NFT?
Non-fungible tokens are quietly gaining popularity in 2020, and there is a lot of room for growth in the NFT market in 2021 as people start to see the potential value and utility of NFTs. Nearly 30,000 respondents believe that NFT is the next hot topic after DeFi, and the combination with DeFi will lead to a new wave of NFT. In general, NFT has a bright future. As Google search trends show, interest in NFTs has exploded.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/from-0-to-1-one-the-universal-nft-knowledge-map-makes-you-proficient-in-nft/
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