A Non-Fungible Token (NFT) is a token that cannot be replaced and has characteristics that distinguish it from other tokens.
Irreplaceable tokens, meaning tokens that can create a unique “one-of-a-kind” value, are now primarily utilized in blockchain games.
In addition to games, NFTs, which can give uniqueness to digital data, are being put to practical use in a variety of fields, including memberships, proof of ownership of real estate, copyrights, and art.
This article will focus on the current hot topic of NFT and will discuss the following items in detail.
What is NFT? Difference from crypto
Non-Fungible Token (NFT) is an irreplaceable token that can be built primarily on the Ethereum (ETH) blockchain. This NFT technology is being used in the gaming and real estate sectors and is about to be revolutionized.
To be more specific, irreplaceable tokens have the characteristic of being uniquely valuable.
For example, 1 bitcoin held by person A and 1 bitcoin held by person B are of equal value and are “substitutable”, meaning they can be exchanged.
On the other hand, “irreplaceable ” means that no two items are exactly the same, and that they are one-of-a-kind, such as a T-shirt autographed by a gold medalist.
To learn more about Ethereum, click here.
Differences between NFTs and crypto
A token that is one-of-a-kind and irreplaceable is called an NFT, whereas a token that is replaceable, such as a crypto (virtual currency ), is called a FT (Fungible Token / Replaceable Token). The differences between the two are as follows
| NFT | FT | |
|---|---|---|
| feature | Non-substitutable(No identical tokens exist) | Substitution possible(The same token exists) |
| Token Standard | ERC721 | ERC20 |
| Areas of application | Gaming, real estate, sports, art, memberships, etc. | crypto, etc. |
Because of this “irreplaceable” nature, NFT technology is being used to create characters with unique value in games and to prove ownership of memberships, real estate, etc.
ERC721 Standard
The ERC721 standard for Ethereum (ETH) is widely used in the issuance of NFTs.
Tokens issued based on the Ethereum (ETH) blockchain are called ERC tokens, and ERC stands for Ethereum Request for Comments, which is a smart contract standard.
Although ERCs are numbered by standard, most ERC tokens use the ERC-20 standard, which provides basic functionality.
The ERC721 is not as well known as the ERC-20, but each one has its own independent value, a feature not found in the ERC-20.
Four features of NFT
The NFT has four main characteristics
- uniqueness
- abstraction possibilities
- interoperability
- programmability
uniqueness
As mentioned above, the NFT is built on a blockchain, which allows it to grant “uniqueness” to the data it creates.
In other words, it is possible to create a one-of-a-kind item that cannot be copied or tampered with, just like an actual painting or piece of jewelry, even if it is data.
Tradeability
NFTs are managed by a decentralized blockchain, not by a specific organization. As a result, owned NFTs can be freely transferred and traded, just as with Bitcoin and other crypto.
interoperability
Most NFTs are issued under a common standard called “ERC721,” and can be traded in principle anywhere in a wallet or marketplace that follows this standard.
programmability
Programmability refers to the ability to program various additional functions into the data.
Programmability allows the author of an NFT to pre-program fees and transaction volume limits for secondary distribution. By utilizing this functionality, it is possible to create a system in which “a portion of the purchase price is transferred to the author at the time of distribution,” even if the NFT leaves the author’s hands.
This programmability also allows NFT authors to collect fees without having to go through an organization that manages copyrights.
Why NFT is attracting attention
Blockchain technology is already being used in the fintech sector and other areas, and the addition of NFT features is expected to further expand its use in other areas.
NFTs have a feature that other tokens do not: they are irreplaceable.
This would allow NFTs to prove their inherent value and broaden the use of blockchain, such as proving ownership of memberships and real estate, and enabling the buying and selling of real estate.
The NFT is expected to continue to attract a great deal of attention in the future, as it is expected that its unique features, which are not found in other tokens, will continue to advance digitization and simplification in all areas.
3 Ways to Profit from NFT
Many people who are interested in NFT may be wondering how to make a profit with NFT.
There are three main ways to make a profit at NFT
- (1) Aim for gains on the sale of NFT transactions
- (2) Exhibit NFT works produced by yourself at the market
- (3) Purchase NFT-related crypto
Let’s take a closer look at each of these.
(1) Aim for gains on the sale of NFT transactions
There are a variety of NFTs in circulation, many of which are traded on marketplaces that deal in NFTs, such as opensea.
Like stocks, crypto, and real estate, NFTs fluctuate in value over time. Therefore, you can make a profit on the sale of NFTs you have purchased by listing and selling them on the marketplace when their price rises.
(2) Exhibit NFT works produced by yourself at the market
The NFT Marketplace is also a place where you can exhibit and sell your own NFT works.
Therefore, those who can create their own illustrations, music, VR art, etc., can sell them on the market and then earn revenue if they find buyers.
(iii) Purchase NFT-related crypto
Some crypto are NFT-related issues developed for use within specific NFT games or NFT platforms.
In general, as the demand and name recognition of the underlying NFTs, such as games and platforms, increases, the value of the crypto related to them also tends to increase. Therefore, it is possible to earn a profit by buying stocks related to NFTs that look promising on the exchange and selling them when the price rises.
How to get started and purchase NFT
The following steps are commonly used to purchase NFTs.
- (1) Open an account at a crypto asset exchange
- (2) Deposit money to a crypto asset exchange
- (3) Buy crypto
- (4) Log in to the NFT Marketplace
- (5) Purchase NFT
Since there are numerous NFT marketplaces in the world, it is advisable to decide which service to use based on the titles handled, ease of use, and low fees.
The most common marketplace is https://opensea.io/.
Specific examples of NFT applications
Because NFTs are irreplaceable tokens, they are being used in a variety of fields.
In this chapter, we will discuss in detail the following areas that have already been put to practical use.
- Game
- Art
- collector’s item
- fashion
- sport
- membership right
- real estate
- collateral loan
- Other (tweets, online tickets, etc.)
game
Currently, NFT is used primarily in the gaming sector.
Games developed based on blockchain technology are called ” blockchain games ” or “DApps games,” and NFTs are used for items and characters in these blockchain games.
Because NFTs are tokens with characteristics that can create unique value, they can generate the following advantages over existing games.
Differences between blockchain games and existing games
The differences between existing games and blockchain games are summarized in the table.
| existing game | blockchain game |
| Money earned in the game cannot be used outside the game.Items and characters you have acquired disappear when the game ends.Cheat play may occur. | Items acquired in the game become assets.Items and characters that you have collected through hard work will not be lost.No need to worry about cheaters |
In existing games, even if currency or coins were obtained in-game, it was essentially impossible to use them outside the game.
However, in blockchain games, NFT technology can be utilized for digital assets such as items and characters acquired in the game, allowing them to be used in different target games and freely bought and sold within the target marketplace.
In addition, since blockchain games are decentralized and cheating requires consensus among participants (nodes) around the world, cheaters will be immediately exposed. Therefore, blockchain games can be played with peace of mind without having to worry about cheaters.
Five recommended blockchain games
Among the many blockchain games available, we have selected five titles that we recommend.
- CRYPTO SPELLS
- The Sandbox
- Sorare
- My Crypto Heroes
- CryptoKitties
Each game has its own fan base and is something that people of all ages can enjoy.
art
Until now, artworks such as paintings, illustrations, and photographs have generally been traded as objects. However, with NFT, intangible assets can now have proof of ownership, making it possible for digital art to have a scarcity value.
In turn, marketplaces specializing in trading digital art, such as Nifty Gateway and SuperRare, emerged, attracting more traders to the market for speculative purposes.
As an example of digital art that sold for a high price, the NFT art “EVERYDAYS: THE FIRST 5000 DAYS” by digital artist Beeple made headlines in March 2021 when it sold for approximately $69 million, the highest bid in NFT history.
CryptoPunks, released in 2017 and the oldest NFT project, and Meebits, released in 2021 by Larva Labs, which worked on CryptoPunks, are also well known NFT art.
When first released, CryptoPunks was distributed for free, but as its popularity grew, it became scarce, and in March 2021, one character was sold for 4,200 ETH, making a big splash.
collector’s item
Trading cards and limited edition anime items are also published and sold as NFTs. For example, ” Sorare,” a digital trading card game featuring real soccer players, falls into this category.
On March 14, 2021, a Cristiano Ronaldo trading card (Sorare’s NFT ), then a member of Juventus FC, made headlines when it sold for $289,920.
In September 2021, Shueisha’s manga art division, Shueisha Manga Art Heritage, made a splash when it sold 10 letterpress prints as NFT to commemorate the 1,000th serialization of the popular manga “ONE PIECE” and the release of the 100th comic book volume.
fashion
NFT fashion refers to a digital fashion crossed with NFT (non-fundable token) technology.
The uniqueness and tamper-proof nature of NFTs make it possible to add proof of ownership and one-of-a-kind value to digital fashions.
This has created value as a product in addition to the main uses of digital fashion, such as the ability to try on clothes digitally based on avatars and photos of oneself, mainly through the use of AR technology.
Gap
Gap, a major American apparel brand, has announced its first NFT collection, Gap Threads, for January 2022.
The collection features NFT fashion inspired by Gap’s iconic hoodie (hoodie). The collection is divided into four categories: Common, Rare, Epic, and One of a Kind, with the opportunity to purchase Epic pieces by purchasing Common and Rare pieces (the One of a Kind is sold in auction format).
Note that if you pick up the NFT collection in the Epic category, you will get limited-edition digital art by New York-based artist Brandon Sines and a Gap collaboration hoodie (in person) with his character Frank Ape.
DOLCE&GABBANA
Dolce & Gabbana, a leading Italian luxury brand, launched its first NFT collection “Collezione Genesi (Genesi Collection)” in September 2021 in collaboration with UNXD, a digital marketplace. 9 pieces with a total value of 1,885,73 ETH are sold for a high price of ETH and became a hot topic of conversation.
sport
In some cases, NFTs of players in professional leagues such as baseball, soccer, and basketball are sold.
For example, in March 2021, a dunk shot video by NBA star player LeBron James was converted to NFT and sold for approximately $210,000.
Quotes: NBA Top Shot
membership
There is also the use of converting memberships into NFTs and selling them.
For example, the American economic magazine “Forbes” sold a membership with the added right “not to display advertisements when reading online articles. This membership is NFT-ized and can only be purchased with Ethereum (ETH).
Unlike conventional memberships, memberships utilizing NFT can be transferred to other parties.
Because of the advantages of such NFT-ized memberships, which enable smooth transfer of rights to others, it is expected that they will be introduced in online salons in the future.
See also: Unlock Protocol
real estate
There are also ways to utilize real estate by converting it to NFT to simplify procedures such as buying and selling.
For example, a blockchain protocol called OpenLaw allows real estate to be NFTed, making it possible to securely create and execute contracts for sales and purchases.
Real estate procedures, which used to be complicated and time-consuming, are attracting a great deal of attention because they can be simplified by NFT.
However, the only simplifications in OpenLaw are the tracking of real estate ownership and purchase and sale agreements, which have not yet been implemented for complex agreements such as interest and taxes.
It is expected that the use of NFT will be further developed in the real estate sector in the future.
See also: OpenLaw
collateral loan
One way to utilize NFTs is to borrow assets using them as collateral.
For example, a product called Rocket allows you to borrow DAI (crypto) when you pledge NFTs as collateral.
A simple explanation of the borrowing process is that users lock their NFTs into Rocket, and after review by Rocket, DAI is paid.
If the price of the collateral asset declines below a certain percentage, it is sold in an NFT marketplace such as Opensea.
Other (tweets, online tickets, etc.)
There is also a movement to sell Twitter tweets and online tickets as NFTs.
On March 22, 2021, Twitter CEO Jack Dorsey’s first tweet was auctioned as an NFT and made headlines when it sold for approximately $2.9 million.
The following tweet was actually the winning bid.
Citation: jack
A key feature of NFT is that even seemingly worthless items such as tweets can be capitalized if demand is high.
NFTs can trade directly with 3 marketplaces
NFTs, which are utilized for game items and characters, can be bought and sold in a place called the Marketplace.
We recommend that you keep track of what marketplaces are available, as we anticipate that as marketplaces gain momentum, NFT utilization and awareness will also increase.
This chapter introduces the following four representative NFT marketplaces.
- Opensea (Open Sea)
- Nifty Gateway
- Blur
Opensea
Citation: OpenSea
OpenSea is one of the world’s largest NFT marketplaces with over 300,000 monthly users and over 80 million items handled (as of July 2023).
Founded in December 2017, this New York-based NFT marketplace allows users to trade blockchain game characters, items, and trading cards primarily using Ethereum (ETH).
Nifty Gateway
Citation: Nifty Gateway
Nifty Gateway is a well-known marketplace that was released in November 2018 as a gateway service for trading NFTs by credit card and subsequently acquired by crypto asset exchange Gemini.
In March 2020, Nifty Gateway 2.0 was released, adding the ability to settle payments in U.S. dollars.
One of its unique features is that it offers a service that handles digital goods of artists and celebrities.
Blur
Citation: Blur
Blur is an NFT marketplace that launched its services in October 2022.
As of July 2023, Blur has the world’s highest monthly transaction volume of approximately $535 million. This is an astounding transaction volume, more than three times that of second place OpenSea.
Citation: DappRadar
Blur has implemented an “aggregator function” that integrates NFTs listed on marketplaces such as OpenSea and X2Y2 so that transactions can be conducted only within Blur.
The company also has its own initiatives, such as airdrops of the governor’s token “BLUR” to users who meet certain conditions (e.g., actively trading, exhibiting NFTs).
This user-oriented service is believed to be the reason why Blur was able to acquire so many users in such a short period of time.
NFT crypto asset stocks that are hot right now
NFT crypto are crypto (tokens) associated with NFT projects. In technical terms, it can also be described as being the native token of the NFT project in question.
The main NFT stocks that are both well-known and growing include the following
- ENJ (engine coins)
- SAND
- AXS (AXS)
- MANA
- APE (Ape coin)
- CHZ (Chiles)
- FLOW
- DEP (Deep Coins)
- PLT (Pallet Token)
- GALA
The Future of NFT
The future of NFT,
- Future Business Development
- Ethereum (ETH) (crypto asset)
We have summarized the results from two perspectives.
NFT’s future business development
NFTs are currently primarily active in the gaming sector, but are also beginning to be used in areas such as real estate and memberships.
However, since it is not yet actively being put to practical use, attention is focused on its future prospects.
In terms of future business development, it is predicted that NFTs will be put to practical use in areas where proof of ownership or identification is required, such as in the copyright and art fields, taking advantage of their irreplaceable characteristics.
Thus, NFT will be used in many business areas as a technology to digitalize and simplify all industries.
Ethereum (ETH) Price Forecast
Since NFT is built primarily on the Ethereum (ETH) blockchain, it could contribute to the price increase of Ethereum (ETH) if NFT’s business development progresses.
In the future, as the legal aspects of NFTs are developed and the marketplace becomes more active, NFTs may become more well-known and affect the price of Ethereum (ETH).
We will need to keep an eye on the future of the NFT in order to predict the future of Ethereum (ETH).
FAQs about NFT
Frequently asked questions about NFT are presented here in a Q&A format.
Q.What is the difference between NFT and crypto?
A. Crypto such as Bitcoin can be substituted, but NFTs are different in that they cannot be substituted.
NFTs, which allow tokens to have unique value, are highly versatile and are being put to practical use in a wide range of fields, from gaming and art to real estate and memberships.
Q.How much does NFT start at?
A.Basically, the seller is free to decide the NFT price.
Some blockchain game items, for example, are sold for as low as 0.0001 ETH.
Q.How do I start or purchase NFT?
The following steps are commonly used to purchase NFTs.
- Open an account at a crypto asset exchange
- Deposit money to a crypto asset exchange
- Buy Crypto
- Log in to the NFT Marketplace
- Buy NFT
Q.What are the advantages and disadvantages of buying NFT?
A.Since NFTs are stored on the blockchain, they have the advantage of being less vulnerable to damage or loss than real assets.
Another advantage is that if you have a wallet for crypto such as MetaMask, you can easily buy and sell on the market.
However, by its very nature, NFT has the disadvantage that the asset cannot be owned as a physical object. For example, in the case of digital art, the owner cannot frame the actual artwork and must view it through a monitor.