The Gist: What are NFTs? What are its functions? If you are searching for questions then you have arrived at the right place. In this article, we have covered NFTs in detail and their functions.
Non-Fungible Tokens (NFT) consider the digital response to collectibles in the era of digitization. As more and more companies transition to digital platforms, the demand for strong, secure, and efficient digital networks is growing strong day by day. One striking example is blockchain technology. After cryptocurrency, NFTs are considered the most popular cryptographic assets.
However, many skeptics have referred to NFT as a bubble that will explode at any time in the near future. Despite the uncertainty surrounding this technology, experts are optimistic about these cryptographic assets. According to DappRadar, the total NFT sales have risen from $94.9 million in 2020 to $ 25 billion in 2021. While NFT was first introduced in 2014, it was recognized by mainstream media in 2021. Progressively, more and more people have begun to show interest in this new technology.
If you are willing to buy and sell NFTs, it is important to understand this term. We are aware of your issues concerning NFT. In this article, we have defined NFT in simple terms and enumerated 5 main functions that make NFTs worth millions of dollars.
What are NFTs?
Non-Fungible Tokens (NFTs) are cryptographic assets that represent elements of the real world such as music, art, movies, video games, avatars, sports cards, and so on. In simple terms, any original digital file (video, audio, image, or GIF) can be converted into NFT. Similar to cryptocurrencies, NFTs are encoded with the same underlying software, blockchain.
However, unlike cryptocurrency, NFT cannot be exchanged with other similar digital elements. Each NFT art is unique and individual, therefore, not replaceable or interchangeable. Now the question arises as to what makes the NFT unique and irreplaceable? Tokenizing cryptographic assets enable you to buy and sell NFTs efficiently. Most importantly, all registered transactions are available in the public ledger that everybody has access to. It provides proof of ownership to the buyer, eliminating duplicity and fraud.
Difference between fungible and non-fungible tokens
Nevertheless, using similar underlying software i.e blockchain technology, cryptocurrencies and NFTs serve a different purpose. Cryptocurrencies are like traditional currencies that can be used as a medium for trading goods and services. It acts like money that has an intrinsic value.
Furthermore, cryptocurrencies have their separate blockchain network. For example, Ether, Litecoin, and Bitcoin are some of the popular cryptocurrencies that have their own blockchain networks.
On the other hand, NFTs cannot be traded or exchanged through equivalency because they cannot be used as a method of payment. They are only bought and sold through crypto coins. In addition, every NFT artwork is unique and cannot be split into small quantities.
NFTs are based on different blockchain networks. Some of the prime examples of NFTs are Uniswap, ERC-20, and Chainlink which are all created on the Ethereum blockchain.
Functions of NFTs
We have listed some of the common features of Non-Fungible Tokens below.
- Unique: Each NFT has a unique ID and metadata that makes them different from each other. Additionally, the properties of each NFT are stored and retained in tokens, making the properties unique. There are no two FNI that share the same type of properties or identification code. Tokens serve as proof of ownership to the buyer.
- Scarce resource: NFTs are stored and maintained on the blockchain network. Data is stored on multiple networks that everyone can access. This eliminates duplicity and fraud, enabling a transparent process. NFTs are minted in the specified amount which is why it is often denoted as 1×1 or 1×100, which signifies the scarcity of the numbers of identical NFTs that are minted.
- Indivisible: Another important feature of NTMs is that they cannot be divided into smaller amounts. If you want to buy NFTs, you have to pay the full amount because they can’t be purchased in fractions like Ether and Bitcoin.
- Ownership: Blockchain technology allows everyone to track NFT records and analyze transaction records. This means that you can follow ownership information on the Ethereum network. You may obtain data from the original holder of the NFT and all former owners of the NFT.
- Fraud-free: Blockchain technology has been an asset for safe and fast transactions. The peer-to-peer transaction eliminates third-party approval, making the entire process more transparent and efficient. The data recorded on blockchain networks are monitored by different computer networks. The NFT trade became easy and fast thanks to blockchain technology.
Who uses NFTs?
NFTs have recently become extremely popular among gamers, companies, and artists across a wide range of industries. It is pulling in new players from all sectors daily. Markets for NFTs are becoming increasingly crowded as their popularity grows. It’s another opportunity for artists to engage with their audience and market their work.
You would find different kinds of NFT arts in the market from exciting ape portraits like KrazyKong to funny GIFs like NyanCat. Not only digital artists or gamers, but famous personalities are also betting their luck on NFTs. For example, tech giant Jack Dorsey made headlines when he sold his first tweet for $2.9 million. Many Hollywood celebrities have also stepped up in the game and selling their art for millions of dollars.
Should I buy NFT art? If you are stuck on this issue, then allow us to make it clear to you. If you are interested in the NFT concept, then now is a good time to purchase NFT. Many big players are trying their luck by selling their art. One important thing you should note is that NFT is community-based, so you need to have a strong or following community to sell your art for millions of dollars.
About Krazy Kong NFT Collections
Krazy Kong is a modern monkey who wants to explore different aspects of human life. He is gathering a plethora of information through various media like television, the internet, entertainment, and cinema. Through Krazy Kong NFT art, we aim to contribute to the growth of NFT space and bring environmental and social awareness like deforestation, animal habitat loss, coexistence between humans and other animals, and inequality.
We are still in the early stages of NFT projects and will soon launch an exciting collection of Krazy Kong NFT on the major NFT markets. To know more about our NFT project, join our Discord community.