NFTs (non-fungible tokens for its acronym in English) are a type of cryptographic token of a blockchain network that represents a single asset; they have the special characteristic they can be totally digital or “tokenized” versions of real-world assets.
A token is a unit or token of value created by an organization or entity to establish a business model and thus empower its users to interact with its products or services, thus facilitating distribution and distribution. Of benefits among its shareholders. In other words, a token is an object similar to a currency, with the difference that tokens have no legal tender value; an obvious example of a token is the tokens used in casinos.
NFTs on the Ethereum network
This type of asset is gaining more ground every day, and now they are part of the new culture in which the blockchain network and cryptocurrencies are closely related. Previously we valued tangible goods that we see and touch (for example, gold, works of art, or stamps); however, today, many people give importance to intangible goods, which we can see but cannot touch. The NFTs go a further step, applying the concept of “store of value” to those objects that could be collectibles. An example of this is CryptoKitties (video game tokens), which are still an asset and are traded at very high prices.
Characteristics of the NFTs
Unlike what happens with cryptocurrencies, which are interchangeable, NFTs are not interchangeable; no two NFTs are alike. The cryptographic letter is unique, just as it is a work of art or a postage stamp. Most of these tokens, stamps, coins, designs, and works of art online are based on the standards of the Ethereum network and its blockchain. This has made it easy to operate with them when buying or selling them. Some characteristics of the NFTs are:
Unique and indivisible
They are assets very analogous to a work of art; several copies can be shared on the Internet. Still, the owner can claim that he is the sole and real owner of the original work (since each NFT has a unique identification). Unlike cryptocurrencies, NFTs cannot be divided into small parts; their value is for the complete unit (for example, there cannot be 1/8 of crypto kitties digital work).
Through the blockchain, it is possible to verify something complex to show or verify in the physical world, such as works of art, collectibles, or stamps. For this reason, the chain maintains a history of the seller and buyer of an NFT, and it is known who is the current absolute owner, that includes its original creator, from whom the digital asset was purchased in the first place, and all the commercial history of said NFT.
The NFT data is stored on the network through a smart contract; that is why it is indestructible. It is not deleted or replicated. There is a guarantee that it will be fulfilled since it has the same support and confidence as any other smart contract.
They are not interoperable
NFTs are not interoperable; for example, a CryptoKitties card cannot be used in other similar games (such as CryptoPunks) since each token card belongs only to a specific game. In contrast, it would have no value (since it just doesn’t exist).
Potential for digital artists
The NFTs have the potential to promote and support the work of different digital artists. However, in the past, these types of artists had many problems with monetization and control of their digital creations; now, with the NFT, the creators of digital art, you can have more control of your works online. However, like cryptocurrencies, it is important to consider that there are quality and reputable NFTs, while there will be NFTs that do not add any value, that is overvalued, or are speculative; however, if this tool is used responsibly and behind it, there is a talented and ethical digital artist, the environment can develop and prosper, adding value to all those involved.
What do you think about this topic? Did you know the concept of NFTs? What other branches or sectors do you think can benefit from NFTs?
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