Non Fungible Token(NFT'S)
NON FUNGIBLE TOKENS [NFT]
Today we will be looking at the crypto concept NFT
NFT stands for non fungible token .”fungible ”relates to not unique and
interchangeable. If I asked you to exchange a biology textbook with me for the
same biology text book of cause you will go ahead with the trade because the two asserts (textbooks) are exactly the same, that is fungible.
But if I said to exchange the textbook with me for and upgraded one that has more information , it’s unique and probably has a CD attached to it for further learning. Now this trade becomes tougher for you because your textbook is unique to mine and more expensive ,this is non fungible. NFT’s are basically unique coins used to ‘state’ ownership to a particular digital
assert or file with authenticity. “State” because they don’t actually have the rights to owner ship, they can only make claims to the rights of ownership of the digital file. They more like have the rights to brag that they have the ownership of the file and they are allowed to sell it to the next user who is interested in it . An NFT is only as valuable as the next user is willing to pay for it. Some digital files that can be sold as NFT includes digital artworks, eBooks,
websites, snapshots of famous people. System of NFT creation flows from
• A creator creates a digital good/file
• The creator then creates token on a block chain that supports smart
contracts e.g. Ethereum, Cardano etc…the token holds information about
the digital product now being sold. Information like the token name, the
token symbol and a unique hash that proves the authenticity of the NFT
that links to the good.
The digital product is not stored to the token just the information is. This link can direct anyone publicly to where the digital product can be found online and be bought.
• Once the token is found it can be traded and the creator can now sell it to
someone else, that person now becomes the new owner of that assert.
NFT’s can be programmed so that the creator gets a royalty or percentage that will be given to him each time a new person buys the NFT. As the NFT keeps switching hands or is sold , the price of the NFT keeps increasing because each user wants to sell it at a higher price than they bought.
NFT can be bought through a centralized or a decentralized platform . On a
centralized platform, this will require you to sign up to create an account and fund that account using your credit card in order to buy the NFT.eg niffy gateway. The decentralized method will require you to have a decentralized wallet compactible with your network or block chain e.g. on the Ethereum block chain the best wallet is Metamask. Your account is funded with crypto currency with will be used to buy the NFT.eg of decentralized platforms for NFT are opensea, superrare, rarrible.
Some examples of NFT projects are Punks NFT, MBA snapshot NFT, the first
twitter tweet NFT, etc….
NFT can be used as collaterals in defi instead of crypto currencies. It can also be used to show ownership of domain name, when printed, they can be hung on the walls as physical art works.
Note to be careful when investing in NFT’s because they are always built around hype.
Some some times people spend a lot of money to buy an NFT only to be unable to sell it because the hype surrounding it is died down, and remember that the price and value of an NFT is how much the next buyer is willing to pay for it.
So invest in NFT’s based on current and recent hype because they are very hype sensitive.
Some questions to put into consideration before investing in an NFT are
• If it was the first NFT of its kind ever created
• Its utility or real world benefits
• Its uniqueness; is it rare?
• Ownership history, if someone important owned the NFT before.
Because these are the criteria that make an NFT valuable and worth investing in.
