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How does NFT work?

Five Charged In France Over 'Bored Ape' NFT Theft

NFT is not a cryptocurrency, but a non-fungible token. The main difference between such a token and a coin lies in the name itself. Each Unicsoft – nft marketplace development company is unique, it has no analogue, while conditional 1 ether can always be sold and bought another 1 ether, and they will be the same.

So, if we say that any item is interchangeable, then this means that there is a complete analogue of it. Take a $ 20 bill for example – if you lend it to a friend, you won’t notice if you are repaid with another bill of the same denomination.

NFT tokens are the exact opposite. They bring properties of scarcity and scarcity to the blockchain and allow digital versions of collectibles to be created. The very first example was the CryptoKitties game, the essence of which is the raising of digital kittens. There is a known case when a player paid 600 ETH for a very rare kitten, which is more than $ 2.4 million at the end of November 2021.

Non-fungible tokens have already begun to change the world of art and computer games. Digital art has become ubiquitous in recent months, with some of the art being sold at prestigious auctions for hundreds of thousands of dollars. The loudest example is the work of the artist Beeple “The First 5000 Days”. It was bought at Christie’s for $ 69 million.

NFT tokens gave a huge boost to the development of GameFi (Game Finance). Users talked about how they earn thousands of dollars by buying and selling these tokens.

How do NFT tokens work?

Let’s consider the main features of NFT tokens:

  • Ethereum blockchain. NFTs most often run on the ether blockchain. But after the emergence of congestion in the network, new projects began to appear on alternative platforms. The same GameFi often uses other projects due to the high cost of transactions and commissions within the ether network.
  • Deficiency. To preserve the value of NFTs, their supply needs to be strictly limited. Tokens are of varying degrees of rarity. This means that only a small number of certain rare and most popular tokens can exist. NFTs for some games are sold in packs – giving each player a chance to get the desired NFT.
  • Indivisibility. Another difference between non-fungible tokens and cryptocurrencies is their indivisibility. And if you can send 0.05 bitcoin to a friend, then you cannot do the same with 5% NFT token.
  • Authenticity guarantee. Last but not least, like all blockchain platforms, NFTs allow you to track the authenticity of an asset and see the history of its ownership.

According to many experts, NFT tokens can help breathe new life into the struggling music industry affected by the coronavirus pandemic. Kings of Leon pioneered this and released their next album in tokenized form. The rarest token available offered a variety of benefits, including front row seats at live band concerts, lots of merchandise, and a personal driver on the day of the show.

What can become an NFT token

As practice shows, anything can become a non-fungible token. Technically, any digital object can be transferred to the NFT form.

These tokens have become popular with artists as it makes it easier for them to sell their work. Now they do not need intermediaries in the form of galleries or curators: artists directly contact buyers through marketplaces.

How to create an NFT token

Making an NFT token for free with your own hands is quite simple. You will need:

  • content that you turn into a token;
  • Ethereum wallet;
  • marketplace (take OpenSea for example).

Where to buy an NFT token?

Non-fungible tokens are sold on special marketplaces. With the growing popularity of NFTs, the number of sites where you can purchase them is also growing, and with can be found more details.

For the past ten years, the entire crypto sector has been in a state of insanity. ICOs, which boomed in 2017, are a prime example. But many investors lost huge sums on this due to scams and failed projects.


About the author

Jike Eric

Jike Eric has completed his degree program in Chemical Engineering. Jike covers Business and Tech news on Insider Paper.

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