What Beginners Should Know About Non-Fungible Tokens?

Whenever a piece of art was purchased in the past, one of the greater concerns of each future art owner was its authenticity. Are you looking into an original version or just an incredible good copy that’s deceived everyone around you? To confirm if you’re to purchase an original, you would need to reach out to an art expert and pay for their services. All of this is avoided and simplified when the technology was introduced and art found its place online. 

With NFT development, people who both sell and purchase art or any other collectibles are now able to trade these items without fear of their authenticity. If there is a non-fungible token attached to a piece of digital art, it implies that the piece is original. With NFTs, the copies and fake versions can easily be identified because they won’t be identified on the blockchain. 

How it began …

The first non-fungible tokens were colored coins on the Bitcoin blockchain. When compared to the NFTs we have today, these were a lot less effective and they also had limited functionality. Regardlessly, they were the starting point of these groundbreaking development, which is still evolving. Although with limited potential, the first NFTs made people realize the benefits of having assets on a blockchain. In 2014, when a platform named Counterparty was built on the Bitcoin blockchain, NFTs began to evolve into a shape as we know it. 

There were many digital assets and games on Counterparty, with Spells of Genesis and Pepe Memes being the most popular ones. Three years later, Ethereum had begun to take off, and with CryptoKitties making its debut the same year, people started becoming interested in owning digital assets. SamsungNEXT and Google Ventures were among the first companies that began pouring incredible amounts of money onto NFTs after realizing their potential. 

Non-fungible Tokens

To completely understand non-fungible tokens, let’s unfold first what’s hiding behind the word ‘fungible’. Fungibility refers to items that are interchangeable and indistinguishable. While fungible items can be divided into parts, non-fungible like NFTs cannot. There is no other non-fungible token that can replace the one you have and it cannot be divided into parts that sum altogether the same value as your NFT, such as dividing a five-dollar bill, for example. 

NFT uses cryptographic technology to ensure you do own an original version of a digital asset. So, if you decide to buy for instance an online collectible card or celebrities NFT, you can be certain that this particular digital asset is yours just with ownership of the token.  

Subjective Value

Another thing that’s quite interesting about NFTs is their subjective value. In other words, if you think that your sport non fungible tokens are worth a million dollars, as long as someone is willing to pay for them, there is a market for that. For those who are fans of a certain sport or certain athlete, the NFT related to it can have a lot of sentimental value for them. 

The Technology Behind

With blockchain technology, NFTs are incredibly safe on the digital ledger as these NFT platforms function without a central authority, for instance, banks or governments. These non-fungible tokens are built on blocks of complex algorithms, which add an additional dimension of uniqueness and scarcity. Then, these NFTs are sold on marketplaces created specifically for them where trading, buying, and selling are done with cryptocurrencies. 

For those who are just starting to get into the world of NFTs, you will need to create an account on your chosen marketplace, connect your crypto wallets and make sure you have the cryptocurrency that the marketplace requires so you can purchase your first NFT. 

Categories: Crypto

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November 29, 2021 What Beginners Should Know About Non-Fungible Tokens?