What is NFT?
In this article, we will learn about NFT’s, how it works, and the hype about their benefits in the Digital world. A non-fungible token is a type of crypto-currency derived from the smart contracts of Ethereum. Ethereum is also a form of crypto-currency, but it will need a blog of its own!
NFT structurally differs from classical cryptocurrencies like bitcoins. Bitcoin is a token in which each unit of bitcoin is equal and indistinguishable. NFT is unique therefore, it cannot be exchanged as an equal trade (non-fungible). Each creator has a unique NFT. You can see it like this, now the creator of that token can prove the ownership of the digital assets. Eventually, the creator can also earn royalties every time there is a successful trade on his non-fungible token. This can be a good intellectual property protection solution. The parties related to NFT are: the owner and the buyer.
Generally speaking, NFT is a term that is still unknown to common traders. And for those who know the avenues are unlimited.
Introduction
A non-Fungible Token is basically an ‘intangible digital asset’ representing the real-life objects which are stored in blockchain. Real-life objects can be personal collections, autographed merchandise, digital work, etc. Before we grasp more information, let’s just simply understand the meaning of fungible: objects that can be interchanged of an equal value.
When the world is moving towards bitcoin, they are now pitched as the digital answer to collectibles. It was the year 2014 when the first NFT was drafted by Kevin McCoy and Anil Dash linked to a work of art in the Digital World. The uniqueness of having NFT is, it’s one of a kind.
How does it work?
The development of the NFT ecosystem is still in its beginner phase. Due to a lack of knowledge, individuals might get confused as to how this non-fungible token actually works. Don’t fret! We have got you covered.
How do you create an NFT? – Establishing your own token requires a ledger of records that holds the data. The following are the steps to creating your own.
- Digitize NFT – An NFT owner creates the file, the title, description of the NFT. Check that all the information is accurate. Then he digitizes the raw data into an external database.
- Storing data – The owner then stores all the data outside the blockchain in a separate ledger. They can also store the data inside the blockchain.
- Sign your NFT – Then he would sign the transaction including the data stored and send the transaction to a smart contract.
- Mint and Trading – After a smart contract receives the transaction with the data, then the mining and trading process begins. Now once the transaction is confirmed then the NFT is confirmed, the mining process has finished. Now, the NFTs will forever be linked to that blockchain as their persistent evidence.
NFT craze in India
It is seemingly interesting that our notable figures have their own NFTs. Amitabh Bachhan, Yuvraj Singh, Kamal Hassan, and many other iconic have their own personal collections. However, it is said that buying NFT is not a right fit in the Indian market because of a lack of awareness and indulgence in keeping personal digital collections.
Conclusions
Non-fungible tokens or NFT is an emerging technology phenomenon in the blockchain market. In our blog, we explored what they have to offer. How non-fungible solutions can assist in re-shaping the market of digital/virtual assets.
We also discussed the future of the new token in India as a crypto-currency. The future creation of NFTs in India is increasing. The benefit of having them can be witnessed by many.
There can be usability challenges in the past, like slow confirmation, data inaccessibility, anonymity, and privacy. Similar to most cryptocurrencies. Cryptocurrencies are strictly managed by the Government. The government is regulating this nascent technology in the market.
References
Non-Fungible Token : Overview, Evaluation, Opportunities and Challenges; Qin Wang, Rujia Li , Qi Wang, Shiping Chen; Southern University of Science and Technology (PDF) Non-Fungible Token (NFT): Overview, Evaluation, Opportunities and Challenges
Mazur, Mieszko. (2021). Non-Fungible Tokens. The Analysis of Risk and Return. (PDF) Non-Fungible Tokens (NFT). The Analysis of Risk and Return
