Now that crypto currencies are part of our lives, NFTs appear to revolutionise the digital market and give a new twist to the way that we do commercial transactions. But what are NFTs and how are they different from other blockchains such as Bitcoin?
A non-fungible token (NFT) is a non-interchangeable unit of data stored on a block chain which can be sold and traded.
The different types of NFT units are associated with digital files such as video, images and audio; and they differ from cryptocurrencies, such as Bitcoin, by being uniquely identifiable. This means that there are no two NFTs equal, although they can be replicated.
The first NFT was created in 2014. Consisting on a video clip and registered on the Namecoin blockchain and sold for $4 and its owner referred to it as a “monetised graphic”. By then, NFTs were exclusively linked to work of art, via on-chain metadata (enabled by Namecoin). This is in contrast to the multi-unit, fungible, metadata-less "colored coins" of other blockchains and Counterparty.
By 2015, in London was launched Etheria, the first NFT project with more than 450 purchasable and tradable hexagonal tiles and which were not sold until 2021.
In 2017, the online game Crytokitties was monetised by selling tradable cat NFTs and since then, the attention to NFTs have rapidly increased in the public sphere.
Since 2020, the NFTs market has experienced a significant growth and tripled its value up to $250 million.
NFTs are commonly associated with digital art, games, music and films and are increasingly popular in the art and collectibles scenes.
However, its potential is not reduced to digital artwork. They are also used for digital land purchases, such as Metaverse and they could become a key access to special offers, sales and limited edition products.
Moreover, predictions position NFTs as new possible tickets for concerts or even a way to book and purchase travel packs.
Some of America's biggest brands, including Nike, are already working on expanding the application of NFTs. But NFTs used in consumer products may only be the tip of the iceberg since they may also work as a way to prove your identity online.
The NFTs possibilities are endless, and despite their issues to deal with authenticity and planet impact concerns, the development of virtual worlds can be the definitive boost that they would need to become strong assets.
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