A Non-fungible token (NFT) or unique token, is any crypto asset that’s indivisible, meaning it can’t be divided into smaller units and sold separately. This type of token focuses on the ownership of specific assets in contrast to other tokens which focus on concepts like shares, voting rights or royalties. In this blog post, we’ll go over what NFTs are, as well as how you can use them in the real world and how they compare to other types of tokens and how to make money with NFTs.
What is a Non-Fungible Token?
A Non-Fungible Token (NFT) differs from a typical blockchain token, in that it represents something unique. In many instances, you can consider these tokens to be crypto-collectibles, which are non-divisible virtual assets stored on a distributed ledger. The most prominent example of a NFT today is Cryptokitties. These collectibles are tokens that represent cryptographically unique and immutable pieces of digital art. They are often associated with dApps (decentralized applications) where they serve as a tradable asset or digital representation of an in-game item.
History of NFT
A non-fungible token (NFT) is a cryptographic token on a blockchain that is unique or special. One major difference between an ERC20 token and an NFT, for example, are that ERC20 tokens can be duplicated or recolored. For example, if I owned 5 ETH and sent it to another person via a smart contract, then it would be possible for me to still have access to those same five ETH even though they are technically owned by someone else. This sort of duplication would not be possible with a Non-Fungible Token.
In 2017, Larva Labs created uniquely generated 8-bit collectible characters known as Non-Fungible Tokens (NFTs). At first, these were in a highly centralized location, but now there are many blockchain based games that utilize non-fungible tokens. One major game that utilizes non-fungible tokens to generate unique digital assets on their platform is CryptoKitties. These unique digital assets have been referred to as Non-Fungible Crypto collectibles (NFC). The ERC721 Standard (ERC721) by Axiom Zen was released on November 28th of 2017 and contains all of their code contributions, which allows others to create their own tokenized items through smart contracts.
Why a NFT Different Than a Fungible Token?
Tokens that are fungible, also called cryptocurrencies, are valued only for their potential to become more valuable over time. So if someone loses it or trades it for something else, no one will miss it. This means that if you have a billion dollars in fungible tokens and I have a billion dollars in fungible tokens, we’re each as rich as each other because both of us can go buy all of our basic needs and wants with those tokens (if they weren’t lost or traded).
Non-fungible tokens can be different. They can add so much value to something that losing it would actually lose value to whoever holds them. For example, let’s say there’s a painting worth $1 million USD painted by your favorite artist. A couple months later, your artist paints another painting and accidentally drops some paint on your original painting while she’s moving them around her studio.
Now your original $1 million painting is now worth just $900k or even less depending on what auction house sells it at next year when it comes up for sale (because no auction house could realistically sell an art piece where there was paint dropped onto it). But! If your painting was instead a non-fungible token (that recorded every drop of paint) that recording could actually increase its perceived value rather than decrease it! No longer would anyone know what brush stroke happened first; everyone would focus on how special this piece of art is because you have data about every single movement during its creation.
Furthermore, people may not care about dropping any extra money into reselling or selling off their copy – why give up access to all that data stored within it?! We believe collectibles like artwork, memorabilia, autographs, etc., will begin to rely heavily on non-fungible technology since few things appreciate faster than digital collectibles do and few things appreciate uniquely like these types of items do.
What Do NFTs Actually Mean?
When people hear about non-fungible tokens, they usually think of something like CryptoKitties. But these are ERC721 tokens on Ethereum’s blockchain, and there are other types of non-fungible token (NFT). So what does a non-fungible token really mean?
While ERC721 tokens are a great example to understand what an NFT is, they aren’t necessarily true of every type. There are three main types: asset-backed NFTs represent digital assets; native NFTs represent digital objects; and fungible/non-fungible hybrids refer to game items which allow users to trade pieces back and forth.
NFT Use Cases: Real Word Opportunities
OpenSea, a decentralized marketplace for Crypto Collectibles—also known as Non-Fungible Tokens (NFTs)—recently raised $16 million to develop a user-friendly and secure marketplace. Non-fungible tokens can be used to represent real-world items like artwork and real-estate, but also virtual assets such as game characters and points in a cryptocurrency gaming app.
This is made possible by how each token is cryptographically unique—imagine each character from your favorite RPG with their own ID and individual blockchain balance. For example, you could trade one of your five Dragon Balls for someone else’s. You might prefer your version because it comes from a rare level in World of Warcraft. They want theirs because it has been blessed by Kami, or maybe they think yours is just plain ugly; regardless, there’s no chance that either token will ever appear on another person’s Ethereum address. Theoretically speaking, as long as everyone who owns an asset/character/Dragon Ball uses ERC721 smart contracts or similar open standards to mint its NFT replicas, trading them should become easy and seamless due to their uniqueness.
How To Make Money With NFT?
The key to making money with non-fungible tokens (NFTs) is to identify a problem, and a way that your platform or service can solve it. For example, you might notice that trading card games are often seen as collectible items rather than investments. While most traders will avoid selling their cards until they no longer want them in order to maintain their value, others view them as ways to make extra cash when they’re done playing with them.
Some gamers have even begun making small amounts of money by taking advantage of others who don’t feel comfortable selling their cards online or offloading them at consignment shops—these people buy up cards from individual collectors for cheap and sell them again at a higher price. Let’s see 4 ways to make money with NFTs.
Selling NFT Royalties
When it comes to selling digital art, a creator typically only gets paid once for their work. Once they’ve sold it to collectors and received their cut of profits, there’s no recurring income that can be generated from those sales. But NFTs represent something new in digital art: they allow creators to receive passive income even after selling their creations to collectors. On non-fungible token marketplaces like RareBits or OpenSea, you’ll see royalty rates for different pieces of artwork running anywhere from 3%–50%. This means if an artist has 10 pieces of artwork on sale at $500 each, they could earn up to $1,500 each month without having to sell another piece! It’s easy to imagine how quickly revenue starts adding up when you multiply that kind of money by many different sellers.
Renting NFTs
Renting is a great way to get cash for your crypto collectibles rather than selling them. Note that if you’re trying to build passive income from NFTs, you might want to consider renting out your most desirable items when they are not in use. Some examples of collecting digital assets that can be rented are doges, badges, etc. These assets can be rented with time-locks or receive tokens of exchange in their place.
NFT Staking
When art is created and sold in a blockchain, it can be stored as non-fungible tokens (NFTs) on a digital ledger. This allows collectors to purchase individual pieces of art without worrying about if they can resell it later. They’re purchasing something they can keep and display to their guests, or send back to their favorite artist for an updated version. This means that while they receive passive income from owning the piece, it’s also usable again and again. The new owner receives an identical copy of what they purchased without any changes or need for transactional costs associated with transactions in traditional markets. Additionally, creators receive passive income even after selling their creations to collectors.
Provide Liquidity: Earn NFTs
Once you’ve earned enough tokens, it’s possible to sell them for other cryptocurrency, such as Bitcoin. You can also use your tokens to buy things from stores that accept cryptocurrency. If you’re already a pro at trading and have experience with cryptocurrencies and ERC-20 tokens, then you’ll have no problem selling your NFT for other NFT or even bitcoin on an exchange like Radar Relay. The most reliable way to do all of these things will probably be some sort of desktop wallet, but there are mobile apps and web wallets in development that might be good options later.
Will NFT Survive?
At an event, in France, a few weeks ago, I met one of their top NFT developers who gave me an insight into their future plan. The NFT. Art founder told me that 2022 is going to be even a bigger year for NFTs. They are preparing to launch a NFT blockchain protocol on EOSIO (the basis for TRON). He also believes that they will have a tipping point in 2022 with traction going mainstream.