What is a Non-Fungible Token (NFT)? - Kakiforex | Forex markets for the smart money. What is a Non-Fungible Token (NFT)? What is a Non-Fungible Token (NFT)?

March 6, 2021

What is a Non-Fungible Token (NFT)?

 Over the past year DeFi has been the talk and hype among the crypto community, but at the beginning of 2021 it seems that NFT is starting to steal the spotlight.

NFT is not just a cryptocurrency but also has a unique feature that puts a fairly large gap between other cryptocurrencies such as altcoin and DeFi tokens.

Known as non-fungible tokens (NFT), tokens under this category are not identical to each other and their unique nature makes one of these assets irreplaceable with another, unlike Bitcoin (BTC) or fiat currency which fungible.

Fungible example: RM 1 can be exchanged for another RM 1. The characteristics of the banknote are the same, they can be exchanged with each other as long as their value is the same.

Non-fungible example: You want to replace card A with a new A card, but you will get a card other than card A.

Most NFTs are created in the Ethereum blockchain ecosystem. Most are of the ERC-721 type and the latest is the ERC-1155. Still, that doesn’t mean it has the same features as other cryptocurrencies like Bitcoin, Dogecoin or Uniswap.

Meanwhile, there are also blockchains that have their own NFT; TRON with its NFT - TRC-721.

Dive into this market, NFT can be a variety of digital items such as paintings, movie tickets, songs, trademarks or Crypto Kitty, the first NFT project developed in Ethereum.

NFT can be used with decentralized applications (DApps) to produce unique digital items and crypto collections. More interestingly, NFT can also be used as a token to represent real -world assets. For example a drawing in the realm of reality, then created the same drawing in the form of NFT digital tokens.

NFT digital assets have their own security features and uniqueness that cannot be plagiarized or exchanged. This NFT asset also has its own code and traceable history for the purpose of verifying its authenticity. The value of these assets will be affected by demand and supply. There are NFT assets purchased on bids reaching up to millions of dollars.

Back to CryptoKitties - a game that highlights the concept of collecting, breeding and exchanging virtual cats, built on Ethereum in 2017. It is an early example of a blockchain use case.

Its popularity could cause the Ethereum blockchain to be congested due to the spike in activity on the network.

In addition to CryptoKitties, other projects that use NFT as an item that can be collected and traded include: virtual games, Decentraland; game cards as NFT, Gods Unchained; and role-playing game (RPG), My Crypto Heroes.

Did you know there are also crypto stamps? Crypto Stamps are produced by the Austrian Postal Service and connect the digital world to the world of reality. Use this stamp as usual, to send a letter. Simply put, it can be stored as a digital image on the Etherum blockchain and can be traded as a digital collection.