NFT and Art

What Are Non-Fungible Tokens And How Are They Different From Other Tokens?

Non-fungible tokens are сеrtаinlу gaining ground in thе art wоrld and are mоrе thаn just a fad for thе rich. NFTs (Non-Fungible Tokens) are a wау tо prove digitаl оwnеrѕhiр.

Bello Moussa Amadou
Bello Moussa Amadou

Table of Contents

Introduction

The Insight 💡

NFTs and Ethereum resolve some of the issues related to scalability, scarcity, uniqueness, and proof of ownership that plague the internet today.

With the increased interest in web 3, properties of assets can be fraudulently and easily replicated, hence the need for authenticity.

Fungible Tokens Or NFTs

Does authenticity takes it all ?

What Are NFTs?

NFT
The term NFT generally refers to a crypto asset on the blockchain that represents an intangible and unique digital asset, such as digital artwork, a photo, a collectible game, or even a tweet,  that other assets cannot replicate because it has several exceptional, unique properties.

Usually stored in a digital wallet, NFTs are digital tokens that can be used to indicate ownership of one-of-a-kind items.

They allow us to tokenize things like digital art, collectibles, and even real estate.

The digital file can only have one authorized owner at a stage and is safeguarded by the Ethereum blockchain, with no one being able to edit the ownership record or copy/paste a new NFT for it to exist.

Each NFT is unique, limited in quantity, and not interchangeable. They are distinguished from each other by unique metadata and identifiers, such as a barcode.

The information that makes up the resource is known as metadata.  Metadata allows users to buy or sell items based on their metadata rather than the entire item and are unique and unmodifiable.

NFTs aim to replicate the tangible attributes of physical objects, such as uniqueness, scarcity, and proof of ownership.

The NFT prototypes were colored coins, referring to experimental digital assets created on the Bitcoin network in 2012.

The first asset representing a non-fungible commercial blockchain marker was created in 2014 as an experiment for the Seven on Seven conferences at the New Museum.

As digital collectibles and artistic NFTs continue to attract the most attention in the cryptocurrency community, their potential use cases continue to increase.

They range from general use cases like digital art and games to fashion, music, universities, tokenization of real-world objects, patents, subscription sales, and loyalty programs.

Fungible VS Non-Fungible tokens

Fungible VS Non-Fungible

The fundamental difference between fungible tokens and non-fungible goods can be found in the way they are traded.

Fungible is a term that you can use to describe things like your furniture or dollar bills. Fungible tokens can be traded because their value defines them rather than their unique properties. ETH or dollars are fungible because x number of  ETH =  x USD.

These things are interchangeable with other objects because they do not have unique properties. For example, you could use some dollars to buy euros (forex) or to pay for a service of equivalent value.

Non-fungible assets are unique, require a much more complex valuation before sales could be made, and include real estate, artwork, or sports cards.

What Can Be an NFT?

Mixed Objects

When thinking of fungible assets, one can refer to cryptocurrencies such as Bitcoin, which another unit of this type can replace.

But when looking at non-fungible assets, real estate stands out as an excellent example of something unique in its condition considering factors such as area, architecture, or design.

This is why NFTs can be attributed to various non-fungible or distinct benefits, including but not limited to the following.

  • Oil paintings and digital sketches
  • Musical content such as songs, remixes, symphonies, and background music.
  • Video content, both short and long videos.
  • Real estate such as residential and commercial.
  • Diamonds of different shapes and forms.
Virtually anything unique in its form can become an NFT and maintain its status on the block.
Since it represents the actual asset and its ownership, this gives people a lot of flexibility in the type of asset they want to convert.

What Is The Value Of An NFT?

Value

It's a pretty natural inquiry because NFT isn't limited to typical physical assets like conventional frames with a real value.

They also apply to digital content, such as social media posts, which are typically free.

This means that an NFT value depends on the type of asset it represents on the blockchain.

If the asset in question is tangible, such as a residential property, its actual price is reflected through its NFT on the block.

But suppose the asset is digital content that does not come with a price tag, then its value is only relative.  In essence, its value will depend on the market, supply, and demand.

Consider an artwork, which worth is defined by market sentiment and the amount of money that potential buyers are willing to pay for it.

This implies that the seller can set the price of his artwork to whatever level he desires.  The question is whether the buyer is willing to pay that price to obtain ownership of the item.

Here is a practical framework to consider:

NFT Value = Usefulness + Future Worth +  History + High Liquidity Premium

Usefulness: ultimately, the value of any asset, whether fungible or non, is tied to how it could be utile for the owner, so think of ways your token could be used and maximize on that to increase its value.

For example, if you are in the art industry, and if the art you are minting is decades old, then it is worth pointing that out to capitalize on the rarity and uniqueness.

Future Worth: Many factors play a role in determining the future value of your token; however, the most critical of them is probably the scarcity as time goes by.

As this is mainly dependent on time, the only thing you can do in the present is to think about the future with all its uncertainties and bet against it.

History: think about this from a brand perspective; while purchasing, say, a car, people will give more value to that which was owned by a well-known individual than another standard car, just because of the brand attached to it.

You could also co-create with well-known individuals to elevate the value of your work.

High Liquidity: the more a token is traded, the higher the trading volume, the market value, and the value of the item itself. Investors trust higher liquidity because it reduces risk.

How To Create an NFT and Sell it?

Minting Process

NFT can be created by anyone who wants to sell and share their creations, such as content, art, music, or photography.

The process of creating a non-fungible token is called minting.  The term refers to the processes of transformation of a digital element into an asset on the block.

Similar to how traditional coins are generated and added to the economy, NFTs are minted once created.  

After testing, the digital element becomes tamper-proof, safer, and more difficult to manipulate.

Since it is represented as a non-fungible token, it can be bought, exchanged, and digitally tracked when returned or withdrawn.

Some NFT technologies allow you to send ongoing commissions to the original creator when a referenced item changes ownership.

By minting a token, creators can schedule a royalty clause so that subsequent sales of their digital item will generate profitable income for them.  

If their work becomes popular and increases in value, they can gain an added monetary advantage.

There are situations where users may want to make multiple identical copies of their creations.  For example, selling a collectible may have multiple versions, some more unique than others.

In this case, you have to decide how many identical copies of a particular NFT to include in the block because this number will be corrected, and your NFT will become much more immune.

Different sites offer different options for minting your work. For example, there are platforms such as foundation that simplify the whole process, like creating a Twitter account.

All you need is to create your account, upload your content, put the right information, and start the minting process.

They even allow you to connect a wallet in order to receive your funds.

What is Solidity Language?

What is Solidity Language?
Solidity is an object-oriented programming language used to create smart contracts.

Smart contracts are programs that govern account activity within the Ethereum network. Solidity is a curly-brace language designed for developing smart contracts that run on Ethereum.

It is inspired by C++, Python, and JavaScript and is intended for use with the Ethereum virtual computer (EVM).

Solidity is written statically, and it includes inheritance, libraries, user-defined complicated types, and other features.

If you are a developer, you can use Solidity to develop contracts for things like voting, crowdsourcing, blind bidding, and multi-signature wallets, and... NFTs.

When using contracts, you must use the latest published version of Solidity.  This is because major changes are introduced regularly, as well as new features and bug fixes. This will save you a lot of struggles down the road.

How to Own an NFT?

How to Own an NFT?
NFT marketplaces emerge every day as the hype around the technology grows. There is a nft marketplace for almost any kind of nft collections that allows you sell digital artwork as well as buying them.

In this section, we'll take a look at many of the largest online marketplaces and discuss the unique approach of each to help you make a more informed decision about where to purchase your next nft collection.

  • Zora is a marketplace firmly built around the idea that content creators must regain control of their work from all major platforms.

    Zora enables creators to coin images, videos, audio files, and even plain text documents. The market was recently opened and is now accessible to all creators.

  • Rarible is one of the most accessible sites for creators and collectors who wish to enter the world of NFTs.

    The platform makes uploading your content and generating an NFT as simple as posting a YouTube video.

    In a market full of guest-only sites, Rarible is one of the few NFT destinations where new creators start selling work from the moment they sign up. This openness leads to many things on the site, and its copyright moderation and offensive updates need some improvement.

    Sales for site work vary widely, with parts ranging from a few dollars to tens of thousands.

  • SuperRare prides itself on being the NFT marketplace for digital artists.

    You won't find simple memes, text messages, or sound effects for sale here. The SuperRare collection is highly curated, and the team has been intentionally slow to integrate new creators onto the platform.

    The result is that browsing through SuperRare feels like entering an elite digital gallery.

    The site has an incredible selection of NFTs reflecting thousands of hours of the artist's work. Prices can go up a bit, and new creators are only accepted with a question.

  • Nifty Gateway is a highly selected NFT market with a focus on digital collectibles.

    Nifty works with high-profile artists and musicians like Grimes and Justin Roiland to launch limited edition NFT collections.

    Nifty Gateway is one of the few top NFT sites that accept credit cards and sets it apart from all the other digital retailers on this list.

    Like SuperRаre, art on Nifty is usually quite expensive, and new artists will need to apply before posting work on the site.

  • OpenSea was one of the first established NFT markets and had an extensive library of content with general prices.

    The site covers all types of NFT, from digital art to 3D collectibles and items used in video games.

    OpenSea is also entirely welcoming to novices, making it simple to get started. The site is extremely accessible to those unfamiliar with NFT and has one of the best browsing experiences I have seen in a huge market so far.

    OpenSea is also the first NFT to experiment with a free authoring system for creators openly.

The Issue of Carbon Footprint

Carbon Foot Print

Despite all the hype, there is also a concern that NFTs are not environmentally friendly because they are built with the same locking technology used by many cryptocurrencies.

According to the Digiconomist website, a single Ethereum transaction consumes more energy enough to power 2 U.S. households a day.

The average NFT transaction is still equivalent to more than a month's worth of electricity consumption for a person living in the European Union.
An NFT sold for $5 million has a considerably lower impact on the environment than 100 NFTs that sell for $100 each because of the number of transactions.

This means that the higher the level of transactions, the higher the carbon footprint.

The security of most of today's blockchain network relies on special computers called "miners" that compete to solve complex mathematical puzzles.

This proof-of-work principle prevents people from interfering with the system and incentivizes building and maintaining it.

Mining requires a lot of time and computing power, which determines electricity consumption.

Ethereum's blockchain technology is evolving and moving towards a less computational design.  

There are also emerging technologies like Cardano, which was designed from the ground up to have a small carbon base and recently launched its base.

The speed of transformation of blockchain technologies into a newer and greener variant could decide the future of the NFT market in this regard.

Some artists who have strong opinions on global warming trends oppose NFTs because of the perceived ecological impact.

How To Get into NFT? (Simplified)

It has never been simple to get started in the world of digital art.

First, you will need Metamask.  This Chrome extension acts as a virtual wallet and can interact with platforms to buy and sell your artwork on the block.  It works as a wallet and an electronic signature in one.

Download Metamask, create a wallet, and then send some ETH to that wallet to get started. You can buy ETH with your credit card on exchanges like Coinbase, Kraken, or Binance.

You can submit the transaction to Metamask once it has been completed and verified. This procedure can take up to five days, but it should only be done at the start.

Now you are now ready to mint and buy NFT!

Conclusion

In any case, NFTs are here to stay, particularly for those who regard digital collectibles or electronic transfers as the next big thing.  

By harnessing the real-world trade-in rarities, artwork, and properties, blockchain technology may have found the next big thing for its survival and expansion in web 3.0.

Technology

Bello Moussa Amadou Twitter

Computer science student @ALU I write about technology in general and back-end infrastructure in particular. Currently building a hosting platform based on an open-source project. Milk Lover!