At the beginning of 2022, the world was again covered by a wave of interest in cryptocurrencies, blockchain, smart contracts and NFT tokens. If everyone who has already dealt with cryptocurrencies before is more or less familiar with the first terms. Then NFT or non-fungible token has become super popular only now, although the first projects using NFT appeared back in 2017. Today, you can hear about NFT from well-known international news, from well-known media personalities, from corporations, from bloggers on youtube. And even from an artist or musician, you know. But what it is and what it is for, and even more so how to use it, today we will try to figure it out.
What is NTF?
A non-replaceable token or NFT is a type of smart contract in the Ethereum cryptocurrency network and other less popular cryptocurrencies where tokens you cannot exchange for each other. This technology appeared in 2017 and has its own standard called ERC-721.
Initially, all tokens in smart contracts were fungible. Such tokens were issued according to the ERC-20 standard, the most famous ERC-20 token is USDT stablecoin or Tether. Thus, the ERC-20 token resembles money, which is of equal value in society, regardless of its properties and history.
The ERC-721 standard, on the other hand, allows you to create a token with unique properties and data. And each token can have its own unique value in society, depending on the different conditions of its appearance and history. The most obvious example in real life is art, where a copy and an original of a Picasso painting will have different values. Although at first glance they look the same. NFTs simply solves the problem of copies and the original. Since the history of each token is completely transparent and available to everyone. And property rights are just as easily verified using blockchain technology.
Actually, for these two reasons, NFTs became primarily in demand for the transfer of rights to digital art: paintings, 3d models, music, text, etc. In addition to artists, poets and musicians, NFT capabilities began to be used to create games with unique game items … But games can also have duplicate items, for example, a basic set of weapons, so another ERC-1155 standard has appeared, in which tokens can be completely unique or partially fungible. An analogy from the games is the basic weapon or clothing, which are given at the beginning of the game to each player (partially interchangeable), and a rare unique item that is given only once and only to one player to complete the task in the game (not interchangeable).
Next, we will consider only the ERC-721 token standard, since it is now that it is most widespread and supported on all NFT token sale sites.
Non-removable token storage (NFT)
NFT or ERC-721 stored in the same way as regular ERC-20 tokens (USDT) in the Ethereum wallet. The wallet (address), along with Ethereum, also stores all the tokens issued on its blockchain. In other words, if you lose access to your Ethereum wallet, you will lose access not only to the ether stored on it. But to all tokens associated with that address. Therefore, you only need to buy crypto art from personal wallets, for example, use metamask. If you buy NFT by making a transfer from the exchange, then this token will belong to the wallet in which the transaction was made. That is, you are buying NFT not for yourself, but on the exchange.
History of the development of NTF
The first project to use the ERC-721 standard or NFT tokens was the CryptoPunks project, which was launched by a two-person team in June 2017. Cryptopunks are 10,000 pixel images of people that have been written into a smart contract on the Ethereum network. In the summer of 2017, only a small group of people knew about crypto-punks, which cannot be said now, when this project is known to everyone, and one crypto-Punk token can cost more than 4000 Ethereum or more than 7 million dollars.
If crypto banks set the direction in which to move, then the CryptoKitties project, launched at the end of 2017, in the midst of world attention to Bitcoin and other cryptocurrencies, has become a real popularizer of NFT ideas. CryptoKitties, in addition to being able to collect images of cats, offers another playable element with which you can cross two cats and get another token (cat) for free.
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In 2019 Nike adopted NFT technology and patented its own CryptoKicks technology, with which you can validate the originality of shoes purchased from a store, and in addition to a physically existing pair of shoes, you also became the owner of a virtual pair of Nike sneakers released in NFT.
In 2020, the Dapper Labs project is entering the market in partnership with the NBA under the name NBA TOPSHOT. The project is based on the simple idea of collecting licensed images of players, teams and symbols of NBA games. The photographs are sold in sealed packages, that is, it is not known what cards are being bought. You can also buy the card you need for collection on the marketplace. Where the price will already depend on the rarity of the card you need.
Of the new projects, the most popular at the beginning of 2021 was the Hashmasks project. Which offers a hidden sale of 16328 images of masked people in various combinations of masks, eye colours and backgrounds. In addition to the tokens with the image, the project released the ERC-20 token. Which issued to all hash mask holders, with the help of this token. Hash mask holders can change the name of the masked token or sell all tokens on the exchange.
All of the above projects have become a catalyst for the popularity of NFT, which we are seeing now.
Popular NFT Markets:
All NTF projects, which we talked about earlier, have their own smart contract. Which must programmed in the language of solidity, taking into account the requirements of the ERC-721 standard. Which is beyond the power of every programmer, let alone artists, musicians and 3D designers. Therefore, along with the popularity of the entire NTF market. Platforms or trading platforms have become very popular for creating NTF. From a work of art without knowledge of programming languages.
If you want to create and then sell your NFT token or buy another author’s NFT. Then you only need the Metamask wallet and one of the popular platforms for exchanging ERC-721 tokens.
The most popular currently are the following platforms for creating and trading NTFS:
- The foundation
- Atomic market
- Market of Myths
- Famous yurigin
- A portion
- Asynchronous Art
With the help of the Raible service, Enjin can create its own NTFS for those who have already learned. That is how to use the Metamask wallet. Therefore, tens of millions of NTFS have already created on trading exchanges that do not have their own smart contract. Because of this, finding a truly valuable and rare piece of crypto art becomes an impossible task. In such a situation, NFT investors and collectors are increasingly paying attention to independent projects with their own smart contracts and new fresh ideas. That may increase in value in the future, as did CryptoPunks, NBA TopShop and Heshmasks. But even among the new independent NFT projects. There are a large number of projects that simply copy the code of the CryptoPunks smart contract with their pictures. Which makes them much less valuable in terms of collection.
Truly new projects bringing new mechanics or technologies to NTF counted on the fingers of one hand. One of these promising new NFT projects can be TheCryptoStones. Which offers not only buying NFTs in order to capitalize on the growth of their value, but also game mechanics. That allows you to get even rarer items (chess pieces) when you receive a certain set of cryptostones in your collection. A distinctive feature of this project is the built-in NFT swap or exchange in a smart contract. This allows you to exchange your tokens without using NFT markets to collect your own collection and get even rarer NFT items. 32 Chess Pieces is an example of using a basic set of 4096 NFTs as a framework for other projects. Those are based on ERC-721 tokens as well as ERC-1555 and ERC-20.
While the whole world is buying crypto arts, many technicians are increasingly reminding us that the ERC-721 standard is not ideal. And it cannot provide full-fledged decentralised storage of digital assets. Since it depends on the operation of Open Sea intermediate services and others. So one can expect that ERC -721 replaced by an even newer standard or blockchain that will address existing shortcomings. And become the new storage standard for crypto arts. Meanwhile, NFT tokens issued by all popular and famous people. Which further fuels interest in this market.