Fungible assets denote an item that can be traded or exchanged for a similar value or of an equal value of assets, whereas in a non-fungible asset, the item cannot be traded or exchanged at an equal value because each and every asset is unique or dissimilar from each other and their ownership of the asset can be traced back to its source
WHAT IS AN NFT?
Non-Fungible Token is also known as NFT is a digital asset or a digital certification of an asset. NFTs are unique tokens that are dissimilar from each other and hold a unique value for every token in the blockchain. A non-fungible token can be anything that has the ability to represent itself as a digital asset such as painting, coins, virtual lands, videos, etc. NFTs cannot be replicated or viewed as equal to another digital asset as they possess their own uniqueness and individuality. Non-Fungible Tokens are made up of code lines that are known as smart contracts which execute the agreements and transactions automatically.
WHY NFT HAS BECOME MORE POPULAR IN THE RECENT YEARS:
Throughout the time, NFT has been used in several industries commonly known as Ethereum Tokens. Non-Fungible Tokens have distinct abilities that have made them popular.
- Since the data in the NFT are stored securely in a blockchain, the risk of replicating, stealing or destroying is eradicated.
- Scarcity is the primary reason behind the massive growth of NFT, the NFT developers cannot produce more NFTs since they are restricted to produce and thus it maintains the value of the tokens.
- NFTs are completely indivisible, the Non-Fungible Token cannot be reduced or divided into a smaller fraction of denominations unlike in Bitcoin or other fungible tokens, they can be divided into smaller fractions of denominations.
- Since all NFTs are unique and dissimilar, their ownership rights can be traced back to them easily and it eradicates the involvement of third-party verifications.
CHARACTERISTICS OF A NON-FUNGIBLE TOKEN
At the present time, the production of NFTs is less, thus making them very rare. Rarer the NFTs are, the more they are valued and the main reason why the NFTs are rare is to raise the value of the tokens.
NFTs follow the standard ERC-721, they can be purchased from multiple marketplaces, thus they are interoperable.
The NFTs are stored and kept in the blockchain that provides a high level of security, Thus making it indestructible. The data in the blockchain cannot be destroyed or removed at any cost.
In an NFT marketplace, there can be several counterfeits of the same digital asset. Since NFT is unique and they have their own individuality, the replications can be spotted since the authenticity of the digital asset is verified easily due to their uniqueness.
NFT development empowers the future of creativity because the concept of NFT favours artists and creators who tokenize their signature work and release it in the digital market. The development of NFT leads to a greater level of tokenization of digital products such as videos, music, art, coins, etc. NFT development leads to greater functionalities of NFT that acts as a profitable platform for future art creators and game developers.
INTRODUCTION TO NFT MARKETPLACE:
Unlike in Bitcoin, Litecoin, Ether and the other fungible tokens, the transactions are done directly. In the case of NFT, in order to initiate a transaction, it requires a special platform to do so. This special platform is called Marketplace where all the purchasing and buying of a digital asset takes place in a decentralized manner. Marketplaces are built based on the Ethereum blockchain. The transaction in this platform is done by either selling an asset for the fixed rate or raising an auction. The majority of the marketplace platforms require the buyers/sellers to have an electronic wallet to proceed with the transaction. Some marketplaces are exclusive but the majority of the marketplace platforms focus on the creation and selling of art.
EXAMPLES OF MARKETPLACES:
Owning a digital asset has its own benefits over a physical asset, NFTs have their own distinguishable information that is unique from the other NFTs.Since all the NFTs are unique, the verification for the authenticity of the asset becomes easier for the users.
Primary examples of Non-Fungible Token are listed below.
It is an online original trading card series where it highlights the personalities of the crypto and the blockchain space.
In the game decentraland, the owners can purchase virtual spaces and they can be monetized with shops and advertising.
Prospectors.io is a blockchain-based game where the players purchase assets in the form of blockchain and the players earn NFT depending on their gameplay.
Gods Unchained is a digital collectible card game where NFTs can be bought and sold freely.
Cryptokitties is a famous NFT game that took NFT based games to the mainstream, it was the frontrunner among the initial stages of NFT based games. This game includes breeding and collecting cats and each cat has distinct cattributes.
Cryptopunk was one of the first experiments done in the field of NFT, there are 10,000 punks with distinct characteristics sold in terms of Ether which is the native cryptocurrency of the Ethereum based blockchain. Cryptopunks paved the way for experiments such as Cryptokitties, Decentraland, Gods Unchained, etc.
WORKFLOW OF NFT MARKETPLACE:
There are several marketplaces to buy and sell digital assets like Nifty Gateway, OpenSea, Atomic market, etc. There are marketplaces where the user can purchase or sell specific digital assets like NBA Top Shot where basketball videos, cards and images are sold.
Most of the marketplaces charge a fee for gas which is the energy spent during a transaction process. This fee can be paid by using USD converted into Ethereum and the fee for gas varies for all the marketplaces.
The selling process of NFT varies in all marketplaces depending on the fee for gas, mode of payment, etc. The common process of selling a digital asset in the marketplace platform is, first, the user is asked to upload the contents of the digital asset he/she wishes to sell, then the minting process takes place in order to convert it into an NFT, after the conversion process, the description is added to the content and the price in which it should be sold is also added along with the description. Ethereum is the commonly used mode of cryptocurrency payment.
NFT MARKETPLACE DEVELOPMENT:
Non-Fungible Token Marketplace can be developed by two primary methods, the first method is the custom made marketplace where the user can create his own marketplace platform and the second method is integrating with OpenSea SDK. By integrating with the OpenSea Software Development Kit, the user can create the platform in a very short period of time but the major drawback is that it imposes limitations to the creation of the marketplace, whereas in a custom made marketplace, the user can create the marketplace platform to his own desired specifications.
HOW TO CREATE NFT MARKETPLACE :
These are the steps to create an NFT marketplace:
In order to create a successful marketplace, the developer must have some certain knowledge about the digital market. The developer should focus on the vertical market rather than the horizontal market where the supplier sells everything for everyone, whereas in the vertical market, the supplier sells the product that meets the requirement of a specific type of target group.
To choose the user roles:
There are three types of user roles in the marketplace development process, such as buyers, creators and administrators.
The platform development process begins with the documentation of the project. If the user is willing to hire full-time developers, this step is unimportant but to manage a remote development team, project documentation is one of the most crucial processes as it saves time and gives a detailed roadmap towards the next step of creating a marketplace.
In this stage, the user chooses the framework for their project, dedicated SDKs are used to ensure fast platform operation, good performance and reliability.
To implement Token Generators:
At this stage of development, smart contracts are implemented by using Token Generators. The main functionality of these token generators is to implement logic to the web page.
Test and Execute:
This stage helps the user to identify bugs and fix them, it ensures the launch of the product. Additionally, software testing ensures that the current project meets the requirements of the originally specified project. The main reason why this is one of the most important stages is that a properly tested software product provides reliability, security and high performance.
FUTURE OF NON-FUNGIBLE TOKENS:
Whatever be the risks, the future looks promising for Non-Fungible Token as the total market crossed a massive $100 million by the end of July 2020. Experts in the market have predicted that the 40% of new crypto users will see NFTs as an entry point.
With the DeFi industry surpassing $4billion in value, it is absolutely evident that the NFT space is set to grow exponentially in the near future.
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