What are Non Fungible Tokens (NFTs)? - Everything You Need To Know
What Does DeFi Mean?
To your wonder, for the past couple of years, DeFi is captivating the blockchain era, and we have witnessed this growth once after the rise of numerous new cryptocurrencies in the marketplace. Well, it's true, DeFi is meant to offer solutions for high demanded fintech industries by bringing it in a network that operates in a decentralized fashion.
Everything moving in DeFi (ie, exchanges & transactions) is really fast by further enhancing the network on a large scale. On another point of view, "Mass adoption" happens as people started accepting Decentralized finance projects/platforms, as it is making the DeFi user's work simple in an effortless way.
DeFi matters a lot to the majority of the population in 2021, as people are getting adopted to a scalable platform that operates in online without the necessity of a central network. As DeFi promises to perfectly carry out the transactions on a massive scale, many DeFi projects are developed & introduced.
Some of them are PancakeSwap, UniSwap, SafeMoon, BakerySwap, etc,... In this article, we are going to explore one of the new concepts called "NFT" in DeFi.
Let us get started!
What are Non-Fungible Tokens (NFTs)?
Non-Fungible Tokens (NFTs) is a popular digital asset that comes with a combination of real-world objects like collectibles, games, music, art, videos & more. This NFT can be brought in online and that too frequently with cryptocurrencies. Blockchain carries out the above entire operation as there is an increase in popularity & demand have raised in exchanging NFTs in the marketplace.
The non-crypto audience is benefitted on a huge scale as NFTs is taking the digital world by storm. It is creating a big opportunity as this unique digital asset (NFTs) is developed on top of the Ethereum network. Buying and selling of NFTs are processed by smart contracts in this Ethereum blockchain network.
How NFTs Differs from Cryptocurrency?
Certain characteristics of Non-fungible tokens make them distinct from other popular cryptocurrencies. Even though NFTs are programmed and coded like Bitcoin, Ethereum, Ripple, etc,.. NFTs are different. It has its own unique value and couldn't be exchanged for any other cryptocurrency. The value of the NFTs also does not equals with any other, which means it is extremely unique and could be used for some specific purposes.
Fungible Tokens Vs Non-Fungible Tokens
Let's sort out the major difference between fungible and non-fungible tokens in brief.
- Fungible tokens are extremely interoperable and exchangeable as it can be exchanged with any other cryptocurrencies, whereas Non-fungible tokens are unique and couldn't be exchanged easily like the above.
- Fungible tokens are divisible whereas Non-fungible tokens are non-divisible. It means fungible tokens can be divided into smaller units and the token value remains to be same, on the other hand, NFTs are extremely opposite to it.
- Fungible tokens are same whereas Non-fungible tokens are different. Here, each and every token in fungible are different and comes under the same type, in NFT, each NFTs are identical and unique.
NFTs & DeFi - Is It A Good Combination?
Many of us would haven't heard this term. NFTs are called as a cryptographic token and it is not like the other traditional asset. These non-fungible tokens have it's own set of unique value and it represents collectibles like digital art, or other digital items like music, games & more,...It is rare and it is most secured stored by following the cryptographic security policy.
It operates on the blockchain-based network and that too mostly on the Ethereum blockchain. That's how NFT's are combined with DeFi, as NFT comes under the major DeFi project popularly defined as a decentralized exchange platform development for exchanging NFTs. In this DeFi platform, real-world assets like NFTs are easily exchanged in a decentralized blockchain network. Thus, DeFi & NFTs work splendidly together.
General Characteristics Of NFTs
NFTs are unique and much distinct from one another. No two tokens in NFTs appear to look the same. This unique characteristic creates a center of attraction among many NFT users.
A token holder cannot have a stream of NFTs that holds the same value proposition.
NFTs cannot be splitted into multiple units like bitcoin & other cryptocurrencies. This destroys it's value proportion if it is splitted.
It has some key characteristics and it is limited for certain usage only. One cannot use NFTs as per their needs/requirements.
Blockchain verifies the NFT holders and how many NFTs are left over for purchasing.
How Do NFTs Work?
Working principle of NFT is so simple. It functions on the blockchain network, especially on Ethereum network. Popularly these Non-fungible tokens are stored on Ethereum blockchain for processing activities like buying, selling, making of NFTs.
NFT has only one token owner who holds a unique digital asset, thus the owner can be easily verified. Also, at a single point in time, NFT can be owned by a single owner. Here the owner of NFT can store specific information and can digitally sign in NFTs metadata.
Majorly NFT is created for digital objects like
- Video games
- Videos and sports highlights
- Designer sneakers
How To Buy/ Sell /Make NFTs?
Before purchasing an NFT ensure that you own a digital wallet for storing it. A gas fee is also imposed for completing the transaction in a successful way.
Initially upload your content on a digital platform before you start your selling. Give a description for your content and specify a price for it. Commonly NFTs are bought using ERC-20 tokens like WAX & Flow. Any other users trade it by using ERC-20 tokens for buying your NFTs.
It is possible for everyone to create an NFT. For making your NFT marketplace into functionable you need 3 things, (ie) Ethereum tokens, wallet to store, establish a connection to your marketplace.
What Are NFTs Used For?
Let us talk about the real-time application and usage of NFTs.
In our life, we may face problems, "less opportunity to show our talents". Isn't it? To solve these issues, especially for (digital artists), NFT is a solution provider. Using the NFT marketplace one can sell their art by does not relying on digital galleries to expose their artistic framework. Here, a price range is fixed by the seller of NFT while selling their digital asset in a decentralized platform.
Popular Use Cases of Non-Fungible Tokens
I'm happy to list out the popular non-fungible token usecase. First, the most familiar use case of NFT is "Crypto Kitties". Apart from crypto kitties, there are multiple use-cases in NFT for different purposes like voting & elections, loyalty programs, art, real-world assets, virtual assets, copyright, supply chain tracking, medical data, and more.
Digital platform users can make use of this opportunity for exhibiting their talents.
Popular NFT Marketplace
Below listed NFT marketplace empowers your business in real-time, thus fixing major problems faced while selling a digital asset.
- Super Rare
Sellbitbuy - Non-Fungible Token Development Company
We are happy to offer solutions like NFT token development to every one of you. Our experts support you by offering complete technical support for building your highly secured Non-fungible tokens which follow the strong NFT development criteria. Also, We assist you to build other decentralized exchange platforms for making an expansion in your business.
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