Updated: Oct 27, 2021
What is NFT?
A non-fungible token (NFT) is a type of cryptographic token that represents a unique asset. NFTs are tokenized versions of digital or real-world assets. They function as verifiable proofs of authenticity and ownership within a blockchain network. NFTs are not interchangeable with each other and introduce scarcity to the digital world.
Fungibility refers to the property of an asset whose individual units are interchangeable and essentially indistinguishable from each other. For example, all fiat currencies are fungible. To act as a medium of exchange, each individual unit must be interchangeable with any other equivalent individual unit. A one-dollar bill is interchangeable with any other genuine one-dollar bill.
Non-Fungible Tokens Use the ERC-721 Token Standard
Ethereum is the most popular blockchain for NFTs today, as NFTs are typically built using the ERC-721 token standard. This standard outlines a set of features that each non-fungible token should include, but it does not limit the attributes that can be built on top.
Use Cases for NFTs Include:
Creating digital or crypto-collectibles
Managing ownership of digital items within blockchain-integrated games
Proving authenticity of digital art, while allowing artists to retain their copyright and IP
Devising a digital identity system that allows users to control their data from one place
Allowing fractional ownership of high-value items, such as real estate
The most popular application for NFTs to date is CRYPTOPUNKS, 10,000 unique collectible characters with proof of ownership stored on the Ethereum blockchain. The project that inspired the modern #CryptoArt movement. An inspiration for the Ethereum ERC-721 standard that powers most digital art and collectibles. No two punks are alike, and each one of them can be officially owned by a single person on the Ethereum blockchain. Originally, they could be claimed for free by anybody with an Ethereum wallet, but all 10,000 were quickly claimed. Now they must be purchased from someone on the Ethereum marketplace contract. Via the market, you can buy, bid on, and offer punks for sale.
SuperRare is one of the leading players in the emerging NFT-powered digital art space. As its name implies, SuperRare is all about providing a marketplace for rare and valuable pieces of digital art. On SuperRare, artists’ work is authenticated on the Ethereum blockchain, ensuring value. So far, over 11,000 pieces of artwork have been collected by users, according to the SuperRare website.
How to buy NFT tokens
Non-fungible tokens can be purchased on a huge number of NFT marketplaces, including Creary, Rarible, Superrare, OpenSea, and Nifty gateway Marketplace.
Here's how to get your digital hands on some using Rarible:
Step 1: Head over to the Rarible website and click the 'Connect' button on the top right. From here, select the wallet you want to connect to the platform and log in.
You'll need to accept the terms of service before you can log in.
In our example, we'll connect using Metamask, a popular web and mobile wallet.
Step 2: Once logged in, search the platform for the NFT you're looking to purchase.
Once you've selected the NFT you wish to purchase, click the 'Buy now' button.
Step 3: A confirmation window will pop up, asking you to double-check the details of the order.
If you're happy to continue, click the 'Proceed to payment' button to move ahead to the final step.
Step 4: Your wallet click will then pop up asking you to confirm the transaction. Again, if you're happy to continue, simply confirm the transaction and it will be processed.
Once it has confirmed, your NFT will be deposited directly to your Ethereum address and will be yours to keep.
Note: you may want to avoid buying your NFTs during peak times—otherwise you may end up with an inordinately high gas fee (as per our example below).
Digital collectibles open up blockchain technology to whole new avenues, outside of conventional financial applications. By representing physical assets in the digital world, NFTs have the potential to be a vital part of not just the blockchain ecosystem, but the wider economy.
The use cases are vast, and it’s quite likely that many developers will come up with new and exciting innovations for this promising technology.
You can find @4cinemax collection here: