Steemit Crypto Academy Contest / S2W4 - What are NFTs. by @ishayachris
Using your own words to define non-fungible tokens: NFT, and to show the difference between fungible and non-fungible tokens.
Definition of NFT.
NFT which simply stands for non-fungible tokens, can be seen as a digital asset which represents real-world objects such as art, music, game and videos.
NTF can also be seen as a financial security which consist of digital data stored in a blockchain in a form of distributed ledger. ownership of NFT is recorded in the blockchain, and can be transferred by the owner, which means that NTF can be sold and traded. NFTs typically contain references to digital assets such as videos, photos, and audios. NFTs are uniquely identifiable, and they differ from cryptocurrencies, which are fungible, and the market value of an NFT is always associated with the digital file it references.
Non-fungible tokens provide a public certificate of authenticity or proof of ownership, but the legal right which is conveyed by an NFT can be uncertain. The ownership of an NFT has no inherent legal meaning, and does not necessarily grant intellectual property, copyright, or any other legal rights over its associated digital file. NFT does not restrict the sharing or copying of its associated digital assets, and does not prevent the creation of NFTs that reference the same files.
Difference between fungible and non-fungible tokens.
Below are the difference between fungible and non-fungible tokens
| S/n | non-fungible | fungible |
|---|---|---|
| 1 | NTF are unique and non-divisible | Fungible tokens or assets are divisible and non-unique. |
| 2 | nonfungible tokens store data like an academic title or an artwork. | fungible tokens store value. For example, bitcoin |
| 3 | non- fungible tokens are irreplaceable | fungible tokens are interchangeable |
| 4 | non-fungible stores intellectual properties and academic titles | fungible store values, and its a payment system |
| 5 | Non-fungible tokens leverage the ERC-721 standard | Fungible tokens depend on the ERC-20 standard. |
Are NFTs interchangeable? What are the differences between an NFT and other currencies? Is there an NFT marketplace? And how to invest in NFTs?
Are NFTs interchangeable?
Non-fungible tokens cannot be interchanged. They are cryptographic assets such music, photos, and videos on a blockchain which have unique identification codes that distinguish them from each other. they cannot be exchanged even with non-fungible tokens of the same kind.
Differences between an NFT and other currencies
The below table shown some of the differences between non-fungible tokens and fungible tokens such as cryptocurrencies. But for the sake of this question, I will be presenting the differences between non-fungible tokens and currencies such as fiat or traditional currency.
| Non-fungible tokens | other currencies |
|---|---|
| Non-fungible cannot be divided | other currencies can be divided |
| Non-fungible serve as a proof of ownership of files such as music, photos, etc. | other currencies are made mainly for transactions |
| Non-fungible tokens are irreplaceable and not interchangeable | other currencies are interchangeable |
| Non-fungible tokens are decentralized | other currencies are centralized |
| Non-fungible tokens are digital assets | some currencies such as fiat currency are not digital |
| Non-fungible tokens are not regulated by government | other currencies like fiat currency are regulated by the government |
Is there an NFT marketplace?
Yes, there are a lot of market place for NFT. Below are some of the marketplaOpenSea:
OpenSea: OpenSea has all types of digital assets available, and It also supports artists and creators and has an easy-to-use process if you want to create your own NFT known as minting. OpenSea support almost 150 different payment tokens.
Axie Marketplace: it is the online shop for the video game Axie Infinity
Larva Labs/CryptoPunks: this market is best known for the viral CryptoPunks NFT project.
NBA Top Shot Marketplace: in this marketplace, collectible video clips and play highlights, and art can be purchased from the world's premier basketball leagues.
Rarible: Rarible is another big marketplace for all kinds of NFTs, similar to OpenSea. All sorts of art, videos, collectibles, and music can be sold, bought, or created on this platform
SuperRare: this is similar to Rarible, SuperRare is also building a marketplace for digital creators. This site includes videos, art, and 3D images, but collectors can also purchase artwork using Ethereum
Theta Drop: this is a blockchain platform which is built for the decentralized distribution of video and TV on the internet
Nifty Gateway: This market facilitate the sales of some popular digital artists such as Beeple and singer/musician Grimes.
Since we already know some of the marketplaces where non-fungible tokens can be bought and sold. Below are the ways on how to invest.
step1
Research Available NFTs
First of all, choose an NFT that you feel has an upside value potential. The NFT could be some art, music, video, or video game. You can search on Google or Twitter for NFTs.
When looking at the NFTs, try to know when the sale is, what their cryptocurrency requirements are, and how many of the NFT are being sold. So that you will understand better the scarcity behind the one you are investing in.
Some of the things you should confirm are
- The team behind it
- Whether it is on-chain or off-chain
step2
Select A Brokerage or Exchange To Purchase Crypto: You will need to buy the cryptocurrency to get the NFT. Mostly NFTs are purchased using Ethereum, although there are some exceptions. You can buy Ethereum and other cryptocurrencies at a specialized crypto brokerage or exchange such as Coinbase, Robinhood, Gemini, Binance, etc.
step3
Select a Marketplace to Purchase Your NFT: The marketplace is where you can buy and sale NFT. Once you get the marketplace where you will either sale or buy the NFT, the next thing is to register and connect your crypto wallet. Remember, every marketplace has its own crypto wallet requirements. NFT marketplace will either sell for a flat rate or it will hold an auction for the token.
Once an NFT is purchased, it is immidiately stored in a crypto wallet on either the same blockchain, on a different blockchain, or in decentralized system. Remember that the NFT is digital, you can only display it on a screen often as part of a website. in most cases, you don't own the copyright on the original asset of the NFT, which means you can't reproduce it, and you can't sue someone for copyright infringement.
How to create a new NFT and is it possible to have an NFT stolen? And why use a distributed file system like IPFS in this area?
How to create a new NFT
Below are some steps to follow in creating a new non-fungible tokens.
Pick your item: choose the unique digital asset you want to turn into an NFT. This asset could custom painting, picture, music, video game collectible, meme, etc. Be sure to be the rightful owner of whatsoever you want to use to create the new NTF, so as to avoid trouble.
Choose your blockchain: determine the blockchain you intend to use for your NFT. Remember that the popular among NFT artists and creators is Ethereum. Some popular options include Tezos and Binance Smart Chain.
Set up your digital wallet:
If you don't have a digital wallet, you will need to set up one so as to create your NFT since you'll need some cryptocurrency to fund your initial investment. With The wallet will access your digital assets. Some top NFT wallets include Metamask, Math Wallet, AlphaWallet and Trust Wallet. After creating your wallet, buy some cryptocurrencys and connect it to the wallet so that you sell or create a new NTF.
Select your NFT marketplace: after creating and funding your wallet with cryptocurrencys, you can start creating your NFT. As such you need to find a market that will suit your assets. OpenSea marketplace is always a better option for starters because, it allow you to mint your NFT.
Upload your file: each marketplace have steps which guide on how uplord digital files on their platform. Follow the steps and upload your file on the marketplace
Set up the sales process: the final step is to determine whether to sell at a fix price or not. Then set a timed auction and start an unlimited auction
is it possible to have an NFT stolen?
NFT can be stolen. But it can only be stolen by clicking on a bad link, exposing your secret phrase, or via user error. Technically, NFT can’t simply be stolen out of nowhere, rather, you would have to give a hacker access to your wallet where your NFTs are stored before it can be stolen
Why use a distributed file system like IPFS in this area?
First of all, I will love to talk about IPFS is.
IPFS simply means InterPlanetary File System. IPFS can be described as a decentralized file system that is used to share and store files. Interplanetary file system uses content-address to identify each file in a global namespace.
Looking at non-fungible tokens, we know that NFT’s reference to off-chain data can be anything written in code. Most NFT contains an HTTP URL that points to a location of data on the internet, and this can beproblematic for supposedly immutable assets. And the problems are:
- What happens if the server goes down?
- What if that data is deleted?
- What if it sends the incorrect data to the server?
With HTTP URLs, there should a be trust that the service provider is uncompromised and that the content they serve is the real content being searched for. Alhough the token part of an NFT is stored on a blockchain, the asset is only as good as its weakest link.
And as such IPFS can help because, IPFS enables users to store and retrieve content based on the fingerprintof the content itself. When an IPFS CID is put in an NFT, that NFT help to directly references the data itself rather than a HTTP link. More to that, IPFS is compatible with any data storage system. It can help retrieve data off of a centralized provider. In summary, IPFS provide more security to NFT.
How are NFTs used in art, video games and collectible card games? And how are NFTs revolutionizing property titles?
How are NFTs used in art, video games and collectible card games
First of all, it good we understand that NFT are valuable in the art market for two reasons:
It certifies uniqueness to a piece of Art and makes it valuable
NFTs are indisputable records of ownership
For years, artworks are used as an investment; both art lovers, collectors or investors buy them, so that when the market value for that artwork increases, they auction it for sell, and in return they make profits. Thats the same business that apply to NFT-backed digital artworks also. As the supply and demand for digital artworks increase more and more art galleries and auction houses are now adopting the trading of NFTs. More to that, there are a lot of NFT marketplaces, where artists can directly create NFTS for their artworks and sell them.
also, instead of just playing video games for fun, people earn money by playing video games on the NFT market place. This gamed have already been monetized by the marketplaces where they can be played. For someone to play, he or she must have assets in his or her wallet. And if the player looses, he is she looses part of his token and if he or she wins, the he or she wins assets attached to the game that have been played.
In addition, NFTs are used in collectibles card games just like in the case of video games. In this case as a player plays the game, both the investor and the player wins. It is a win win to all players. For players to play, he or she must buy the cards for the game, because it helps them to access the game and play between each other.
how are NFTs revolutionizing property titles?
Non-fungible tokens have revolutionized property titles by enabling the users to see ownership, originality and authentication of their work in the digital market. With that, the users can hold an image of artwork but cannot hold the unique token of ownership of the artwork and that gives more power and ownership to the original creator.
How are NFTs regulated? And what are the solutions to the limits of NFT development?
Currently, there is little or no regulation on how NFTs is to be used. For now, NFTs are regulated as tokens that offers security, and that means that non-fungible tokens can not be classified as crypto assets. As such, one cannot determine how NFTs and cryptp assets are regulated.
Talking about the solution to the limits of NFTs development, I thinks the main challenge with NFTs is lack of regulations. I'm of opinion that kyc should introduced in each marketplace so that uniqueness of each asset can be checked before its been minted by any marketplace so as to avoid fraudulent act.
Thank you so much for reading
I invite at @yakspeace, @simonnigwe, @ijebest to participate.
This is a detailed explanation about the NFTS, I most say you have taken your time to do this assignment well. You have explained NFTs and also you have listed the difference between fungible and non-fungible tokens. I most say I have learn from your article you actually did well my dear friend. Thank you for the invite and I wish you all the best.
Thank you so much dear friend. I'm happy you learned something from my post. Expecting to read your entry soon
You are welcome ☺️ my entry is loading
Yes since ownership is recorded on the blockchain and when ever ownership is transferred it can be seen on the blockchain by everyone.
Yes this is true because currently NFTs are not regulated by the government hence they will hesitate when a user wants to prof ownership over a real property with its digitised asset ok the blockchain.
Yes, you are right and this is because each NFT is unique in the blockchain unlike cryptocurrency assets who are interchangeable cos they are not unique.
This is actually the first NFT market place that I signed to. Their NFTs are soo cool.
Yes that is true. This only happens when your metamask wallet or any other wallet has been compromised.
There are now many marketplaces for NFT transactions, which have become very popular and welcomed by users. I think its popularity will increase a lot more in the future. How to invest in NFT, how to create, whether it is possible to steal NFT. Excellent discussion on these issues. I liked your post very much and it looks like a very informative post.
Thank you so much for your kind comments sir
Thank you for contributing to #LearnWithSteem theme. This post has been upvoted by @Reminiscence01 using @steemcurator09 account. We encourage you to keep publishing quality and original content in the Steemit ecosystem to earn support for your content.
Regards,
Team #Sevengers
Thank you so much. I will always do as expected
Wow! @ishayachris, the great scholar, well come back to Nigeria from NFT's 😂😂😂, to be frank, you have really down loaded everything, thanks for inviting me.
You are welcome, and thank you for honoring my invitation. I hope to read your entry soon
Yes I'm grateful for everything, thank you.
You really wrote awesomely sir
This makes IPFS really flexible and useable in different wallet and this really is one of the major and highly secured features of nfts.
Yes this makes them the best and most reliable market for content creators and awesome investors in the crypto market, as an NFT content creator I am glad that I basically advertise my NFTs on this OpenSea market.
Thanks for sharing
wishing you success.