- Another type of digital assets.
- ‘Fungibility’ applies to real-world assets as well as digital ones.
- Unlike Bitcoin, which has a supply of 21 million identical coins, NFTs have individual characteristics that set them apart from a typical cryptocurrency: unique, rare, indivisible.
- Deep inside a non‑fungible token, metadata describes what makes this asset different from all the rest. This is a permanent, unalterable record that describes what this NFT represents — almost like the certificate of authenticity that you’d get with a rare painting.
- While developers have the freedom to generate an infinite supply of certain assets, they also have the power to limit the number of rare, desirable items in existence.
- NFTs can only be bought, sold and held whole. Remember the rules of non‑fungibility: you can’t purchase 10% of a plane ticket, or collect 50% of a baseball card.
- NFTs aren’t an Ethereum-only thing — these tokens are also supported by other blockchains including TRON, EOS, NEO, and Dapper Labs’ Flow blockchain.
- There’s two ways of measuring their success: the number of users they have, and the USD value of assets bought and sold on the platform.
- Three key reasons why tokenization has the potential to make things even better: ownership, transferable, authentic.
- Your socmed handle can be taken away from you in a heartbeat. NFTs cannot. Blockchain technology helps enshrine your ownership rights — and make digital assets a heck of a lot easier to move around.
- NFT use cases: art, collectibles, gaming, virtual assets, real-world assets, identity.
- Crypto domain name providers like the Ethereum Name Service and Unstoppable Domains, offering extensions including .eth and .crypto.
- Rare NFTs can equal big bucks — like when a one-of-a-kind diamond is auctioned off.
Pros of NFT
- They could unlock new revenue streams in gaming, sports, the arts, and technology.
- NFTs could introduce millions of people to cryptocurrencies for the very first time.
- They can transform our attitudes toward ownership — and make it possible to own a real-world asset that’s thousands of miles away.
Cons of NFT
- Building decentralized apps for non‑fungible tokens can be tricky and time consuming.
- Much more simplification is needed so NFTs are easy to use for people who know nothing about blockchain.
- NFT games can have a ”hot potato” effect. Players buy an asset in the hope of selling it on for a profit, but if the market collapses, they can make a nasty loss.
NFT Stats
- All these stats making promises of astronomical growth don’t tell the full story, though. The NFT space does have its challenges.
- According to Nonfungible.com’s annual report, most projects have a poor retention rate — and in 2019, the vast majority were used for three months or less. As of February 2020, just 3.5% of these platforms were used for more than 10 months.
- The liquidity of NFTs is also a crucial measure of how healthy a marketplace is, but in 2019, just 12% of newly created assets actually circulated between users.
Big NFT News in 2020 (so far)
- Back in March 2020, Tyler and Cameron Winklevoss revamped Nifty, a centralized exchange that allows people to sell their tokens and withdraw their profits in fiat.
- Companies are using NFTs to help consumers establish ownership and control over their DNA data, and others are planning to launch peer-to-peer marketplaces for NFT mortgages and rentals.
- NFTs are even being created for journalistic content in a bid to tackle fake news.
What’s Next?
- A straightforward user interface will be crucial for unlocking mainstream adoption.
- As endless experimentation takes place, we’ll likely see several NFT projects crash and burn. Some will struggle to maintain the excitement and momentum they have immediately after launching.
- As such, if you’re tempted to snap up a pricy token worth a few hundred bucks, make sure you’re not left holding a hot potato.
Full artcile: https://cointelegraph.com/magazine/nonfungible-tokens/