NFT

What is NFT?

Non-fungible Token (NFT)

A non-fungible token is a token that does not hold the property of fungibility, which, in turn, means that it cannot be interchangeable and indistinguishable from other tokens. NFTs allow the tokenization of unique items and provide exclusive ownership for those tokens.

Fungible and non-fungible tokens

We analyze NFT and its application. The first NFTs can be attributed to Colored Coins (multi-colored coins) developed in the Bitcoin network back in 2012. Colored Coins was an experimental project designed to explore the idea of ​​non-fungible tokens. Several newsletters have analyzed its capabilities and cited it as an achievement that sets it apart from conventional bitcoin transactions. However, since it was created on the Bitcoin network, there were technical limitations, as the Bitcoin scripting language required full consensus on its value.

"For example, 3 people agree that 100 different-colored coins represent 100 company shares. If even one participant decides that he no longer equates these coins with company shares, the whole system will fall apart."

Most fungible tokens on Ethereum used the ERC-20 (ERC - Ethereum Request for Comment) standard. The ERC-20 standard works well for many of the features on Ethereum used to create fungible tokens, but it is not as well suited for creating unique tokens. In September 2017, Dieter Shirley, an active contributor to the Github project, proposed the ERC-721 standard for standardizing and creating unique tokens. The proposal was aimed at improving past iterations such as gas efficiency and making the blockchain able to recognize non-fungible tokens.

NFT is a token that has a unique identifier and has additional parameters that allow it to store certain information. The unique identifier is what makes the token non-fungible. Additional information can be any information, such as text, images, audio and video files. Unlike fungible cryptocurrencies, each NFT is unique and non-fungible. Since each bitcoin or ether is homogeneous and almost indistinguishable from the other, you can freely trade them on cryptocurrency exchanges without any problems.

Fungible tokens (BTC/ETH) = Homogeneous

- Tradeable on exchanges - Similar to currencies or stocks Divisible - Can be divided into fractional amounts. For example, Bitcoin is divisible to 0.00000001 BTC, which provides better liquidity when exchanging your tokens.

Non-fungible tokens (NFT) = Unique

- Traded on marketplaces, Used in games, collectible, Indivisible - Cannot be divided into parts. As a rule, they are illiquid, and it is difficult to sell them instantly, in works of art, as intellectual property. However, you cannot trade NFTs with the same ease as no two NFTs are the same.

Each NFT has its own unique identifier and a number of parameters, which makes each instance different from the other, even if they may look the same on the outside. In addition, NFTs cannot be split into smaller parts like regular cryptocurrencies.

What is an NFT Marketplace?

Before we take on an example project that will teach you how to create an NFT marketplace with minimal effort and in record time, we need to make sure you know all the basics. An NFT marketplace is essentially any Web3 application that revolves around selling and buying any kind of non-fungible token (NFT). As such, there can be many kinds of NFT marketplaces such as one open to the general public, where anyone with a crypto wallet can buy and list their own NFTs. On the other hand, there are also NFT marketplaces that aren’t open to the public. Specifically, these only let a particular company or brand sell their NFTs, and do not allow users to list their NFTs.

In addition, using NFTs metadata, you can set different types of functions in place to provide specific functionality.