NFTs

What are NFTs?

To begin to understand the concept of NFTs, we first need to know and understand that in our legal system, there are fungible assets and non-expendable assets. The fungible goods are those that can be exchanged, having a value based on their number, measure or weight. And non-expendable goods are those that are not replaceable.

An example of fungible assets is money. If you have a $20 bill, this is a fungible asset, since you can easily exchange it for another $20 bill, it does not lose value and is exactly the same. Also, this ticket is consumed when you use it. On the other hand, an example of a non-expendable property would be a work of art. If you have a box at home, it is not consumed when used and cannot be replaced by another box. One work of art is not equivalent to another, and therefore cannot simply be interchanged like a $20 bill.

NFT stands for Non-Fungible Token. Tokens are units of value that are assigned to a business model, such as cryptocurrencies. And it is that NFTs have a close relationship with cryptocurrencies, at least technologically, although they are opposites, since a Bitcoin is very fungible, and an NFT is a non-fungible good, but in essence, they are like the two sides of one technological currency.

An NFT is a cryptographic token that is not tradable based on its equality with another. These tokens are fully distinguishable from others, unique, and limited in quantity. NFTs can be used to represent real-world items on the blockchain, but they can also serve as digital collectibles. They can also be used in the fields of digital identity and the metaverse.

NFTs became popular in mainstream culture as a new form of digital art. However, they also offer possible uses in different fields, such as gaming, digital identity, licensing, certificates or fine art, and even allow for fractional ownership of items.

How do NFTs work?

NFTs work through blockchain technology. It is the same technology as cryptocurrencies, which work through a decentralized computer network, with blocks or nodes linked and secured using cryptography. Each block links to a previous block, as well as date and transaction data, and is by design resistant to data modification.

NFTs are assigned a kind of digital certificate of authenticity, a series of metadata that they will not be able to modify. In these metadata its authenticity is guaranteed, the starting value and all the acquisitions or transactions that have been made are recorded, as well as its author. This means that if you buy digital content tokenized with NFT, at all times there will always be a record of the first value it had, and how much you bought it for. It's like when you buy a painting and keep track of where it moves.

There are several frameworks for the creation and issuance of NFT tokens. The most prominent is ERC-721, a standard for the issuance and trading of non-fungible assets from the Ethereum blockchain. Other standards have also been introduced, such as ERC-1155, which allows a single contract to contain both fungible and non-fungible tokens, opening up a whole new range of possibilities. Standardizing the issuance of NFTs allows for a greater degree of interoperability, which ultimately benefits users. This means that unique assets can be transferred between different applications with relative ease.

NFTs can be traded on open markets, including Binance NFT platforms, BNB Chain-based BakerySwap, and Ethereum-based OpenSea. Naturally, NFTs tend to have price changes in response to market supply and demand, as well as the cultural trends that some of them are associated with.

Digital collectibles have the potential to expand the utility of blockchain technology beyond conventional financial applications. By representing physical assets in the digital world, NFTs can be a vital part of the web ecosystem and the broader economy in the near future. The use cases for NFTs are vast, and it is very likely that many developers will discover exciting new innovations for this promising technology.