Non-fungible Token

Nyan Cat

Ethereum

non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable.[1] This is in contrast to cryptocurrencies like bitcoin, and many network or utility tokens that are fungible in nature.

Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership, and the possibility of asset interoperability across multiple platforms.[3] NFTs are used in several specific applications that require unique digital items like crypto art, digital collectibles, and online gaming.

Art was an early use case for NFTs, and blockchain in general, because of its ability to provide proof of authenticity and ownership of digital art that has otherwise had to contend with the potential for mass reproduction and unauthorized distribution of art through the internet. In February 2021 a hype started when US-American digital artist beeple’s work ‘Everydays. The first 5000 days’ was the first NFT artwork to be listed in one of the major auctions houses Christie’s. A few days before, the meme animation Nyan Cat had been sold on an internet market place for $600,000.

Later, popular blockchain games like CryptoKitties made use of NFTs on the Ethereum blockchain. NFTs are used to represent in-game assets, and are controlled by the user, instead of the game developer. This lets the assets be traded on third-party marketplaces without permission from the game developer.

Specific token standards have been created to support the use of a blockchain in gaming. These include the Ethereum ERC721 standard of CryptoKitties, and the more recent ERC-1155 standard. ERC721 is an inheritable Solidity smart contract standard, meaning that developers can easily create new ERC721-compliant contracts by importing it from the OpenZeppelin library. ERC1155, brings the idea of semi-fungibility to the NFT world as well as it provides a superset of ERC721 functionality, meaning that an ERC721 asset could be built using ERC1155.

Non-fungible tokens first became popular when CryptoKitties went viral and subsequently raised a $12.5 million investment. RareBits, a Non-Fungible Token marketplace and exchange, raised a $6 million investment. Gamedex, a collectible cards game platform made possible by NFTs, raised a $800,000 seed round. Decentraland, a blockchain-based virtual world, raised $26 million in an initial coin offering, and had a $20 million internal economy as of September 2018. Nike holds a patent for its blockchain-based NFT-sneakers called ‘CryptoKicks.’ A German conceptual artist compared the hype around NFT Art to the 17th century Tulip Mania and put a single transparent pixel on sale to make his point.

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