What are NFTs and how do they work?

NFTs and what are they

NFTS stands for Non-Fungible Token and they have become increasingly popular over the last year or so as blockchain technology becomes more mainstream and more accessible. Their rise in popularity was largely down to their use within CryptoKitties, where the concept of non-fungible tokens (NFTs) was introduced to the majority of cryptocurrency users.

In this article, we will discuss what NFTs are, how they work, and why they may be useful to you or your business in the future. But first, let’s look at what fungible and non-fungible tokens are.

What Are NFTs?

NFTs and what are they

Non-Fungible Tokens (NFTs) are a new way to represent digital assets. Unlike cryptocurrencies, which can only be transferred or traded in their entirety, these tokens may be split up into smaller parts, or decomposed into individual rights. These parts can then be bought, sold, and transferred like any other cryptocurrency token.

However, unlike most cryptocurrencies, each unit of an NFT represents something unique. It could be a song on a music streaming service, an item in a video game, or even land deeds for real estate. In short: it’s all about ownership. While non-fungible ERC721 tokens have recently been used to represent collectibles such as CryptoKitties, there are many more potential use cases.

Your goal will be to show your audience what kinds of applications you can build with non-fungible ERC721 tokens.

What Is The Potential Of Non-Fungible Tokens?

Unlike fungible tokens that act as a single, interchangeable digital asset, non-fungible (or unique) tokens can have varying degrees of uniqueness. In short, you might own one token of the arcade token with unique artwork that represents $0.25 worth of credits. Or maybe you own another unique arcade token worth 1 million dollars thanks to its association with high-tier collectibles.

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While both tokens may be considered crypto assets or tokens, only one has real value based on its scarcity. The same is true for non-fungible tokens in crypto. They can represent all sorts of different things including gaming items, physical assets like land titles or cars, or even intellectual property like patents and copyrights.

How Do They Work?

What Are Non-Fungible Tokens, or NFTs for short, in the crypto world you ask? They’re a unique type of blockchain token that can be used to represent any real-world asset. Think about them as assets on Ethereum instead of just being coins.

Each NFT is one-of-its-kind, meaning it has its attributes (color, size, condition) and there will never be another exactly like it. This means that unlike fungible tokens like ETH or BTC, each NFT is different from every other token out there. Because of their uniqueness

these tokens have many use cases such as; collectibles (Cryptokitties), virtual goods (Decentraland), and non-fungible digital assets (Museums).

Projects Utilizing This Technology

There are many crypto-based games, apps, and platforms that utilize Non-Fungible Tokens (NFTs). Most famously, CryptoKitties launched in December 2017. This platform allows users to breed digital cats using a variety of non-fungible tokens.

The owners of these cats can then sell or trade them on other markets. Other projects utilizing NFTs include Decentraland, which is an open-source virtual reality platform. Users can buy land and build unique structures within their territory. They also have ownership over any content created within their world.

Another example is Cryptopunks, which is a collectible card game where players collect various characters from different periods throughout history. These characters are represented by unique ERC721 tokens on Ethereum’s blockchain network.

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Final Words

NFTs have become one of the most highly sought-after tokens in today’s market. But what makes them so important, popular, and successful?

More importantly, what makes them different from all other cryptocurrencies out there today? The what and how questions often leave people asking more than just a few questions — which is understandable given that digital assets (or any kind of investment) can be difficult to grasp without an understanding of technical jargon.

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