What are NFT Coins? 20 Facts
What are NFT Coins? 20 Facts
Recent times have seen talk on NFT go into overdrive as covered over at runrex.com, and it seems to be the latest craze in the cryptocurrency world. If you are wondering what all this talk is about and what NFT coins are, then this article, through the following 20 facts, will look to help you out on that count so stick around and keep reading.
What are NFT coins?
An NFT, as outlined over at guttulus.com, is a special cryptographically-generated token that uses blockchain technology to link with a unique digital asset that cannot be replicated. NFT coins differ from popular cryptocurrencies such as ETH and Bitcoin, which are fungible – meaning you can exchange one Bitcoin for any other Bitcoin.
Where are NFT coins commonly used?
Even though the usage of NFT coins has spread to various industries, they are synonymously associated with the gaming and digital collectibles sectors and are most commonly found as a specific Ethereum token built on the ERC-721 standard as discussed over at runrex.com.
What is fungibility?
To understand more about NFT coins, we must understand what fungibility means. According to guttulus.com, fungibility refers to an asset’s ability to be exchanged with a similar asset without sacrificing its value. Additionally, fungibility also defines an asset’s characteristics, such as divisibility and value. For example, one $10-dollar bill is identical to another $10-dollar bill in terms of value which means that when you borrow a $10-dollar bill from someone, you don’t have to return the exact same note, since another of its kind has the same value.
Fungibility in cryptocurrency
In the world of cryptocurrency, one BTC has the same value as any other BTC. However, the game changes when we cross over to non-fungible tokens. An NFT crypto token has a distinct value from any other similar token. Individual characteristics dictate their uniqueness; hence, they are non-fungible, much like real-world assets like rare stones, works of art, and collector luxury items.
What are fungible tokens?
From the previous two points, we can now deduce that fungible tokens are tokens that are tradable for each other, and their value remains constant. In the example from the previous point, Bitcoin is a fungible token since it has the same value regardless of its owner or history.
Characteristics of NFT coins
The following are the main characteristics of NFT coins:
The value of NFTs comes from their scarcity as outlined over at runrex.com. This is why, even though NFT developers can create any amount of non-fungible tokens, they often limit the tokens to increase rarity.
Although not set in stone, most non-fungible tokens are indivisible into smaller units as revealed in discussions on the same over at guttulus.com. This means that you either purchase the entire amount of a digital art piece for example, or you purchase no art at all.
According to the subject matter experts over at runrex.com, this is perhaps the most significant characteristic of them all. Non-fungible tokens have a permanent information tab that records their uniqueness.
Non-fungible tokens are also non-interoperable by nature. For example, a CryptoPunk cannot be used as a character on the CryptoKitties game or vice versa. This also applies to collectibles such as trading cards as a Blockchain Heroes card cannot be played in the Gods Unchained trading-card game.
All NFT data is stored on the blockchain via smart contracts, which means that each token cannot be destroyed, removed, or replicated. Ownership of these tokens is also immutable, which means gamers and collectors actually possess their NFTs, not the companies that create them. Contrast this with buying things like music from the iTunes store where users don’t actually own what they are buying, but just purchase the license to listen to the music.
Finally, another benefit of storing historical ownership data on the blockchain is that items such as digital artwork can be traced back to the original creator, allowing pieces to be authenticated without the need for third-party verification as explained over at guttulus.com.
NFT coin use cases
NFT coins are popular in the gaming industry since these tokens solve some of the industry’s inherent problems as captured over at runrex.com. For example, top games like Fortnite prohibit the sale of rare traits and accessories such as weapons and skins. However, with NFTs, these features can easily be transferred and used in different games, which means NFT coins can help drive in-game economies.
A good example of this is in Decentraland, where participants can buy virtual land as articulated over at guttulus.com. Another example is ENS (Ethereum Name Service) which uses NFTs for its .ETH domains to facilitate buying and selling.
NFT coins are also ideal for fighting identity theft. Some of the examples of things that can be digitized to represent identity include academic qualifications, medical records, and even our appearances. Additionally, digital artists can turn their work into NFTs for copyright purposes. Converting physical game tickets into non-fungible tokens can also help weed out counterfeits, helping prove identity.
NFTs have also brought a new dawn to the collectible world and once again shaken things up in the industry. This is because we have seen collectors move onto digital assets, which is one of the most obvious use cases of NFTs.
These are some of the ways we have seen NFTs being used.
What are ERC-721 tokens?
As covered over at runrex.com, an ERC-721 token is a term used loosely to describe non-fungible tokens. Breaking down this term further, ERC-721 refers to guiding standards when creating NFTs atop the Ethereum blockchain. Therefore, this is a token type that is built based on Ethereum’s ERC-721 standard.
NFTs can live on other decentralized networks
As the subject matter experts over at guttulus.com point out, apart from Ethereum, NFTs can also live on other decentralized networks like EOS and NEO. However, these platforms must have smart contract-capability and a box full of NFT tools. Smart contracts here enable the inclusion of detailed descriptions such as metadata.
What are CryptoPunks?
As explained over at runrex.com, CryptoPunks are considered the original NFT series, and its groundbreaking project predates both the ERC-721 standard and CryptoKitties, which is a popular game on the ETH-powered decentralized protocol allowing the collection, purchase, sale and breeding of virtual cats. This has made it increasingly rare, with an average selling price for one exceeding $6,000.
CoinMarketCap and The Sandbox partnership
In January 2021, CoinMarketCap and The Sandbox partnered to release their own line of CoinMarketCap Hero NFTs. There are 6 CMC Heroes available in total: Brawler, Sage, Liquifier, Hothead, Protector, and CoinMarketCaptain. In the interest of scarcity, CoinMarketCaptain is only available to those that have all five other heroes.
What are the most expensive NFTs?
Dragon the CryptoKitty continues to be one of the most expensive NFTs in the space right now, valued at 600 ETH. Alien #2089 sold for 605 ETH in January 2021, and it is part of the CryptoPunk collection, the first NFTs ever created as already mentioned. An NBA Topshot digital collectible card of basketball star LeBron James was also recently sold for $100,000.