According to DappRadar’s 2021 NFT Industry Report, NFT transactions exceeded $23 billion in 2021. And with NFT generating $12 billion in transactions in the first quarter of 2022 alone, NFT sales and transactions are as high as they’ve ever been, and have recently become an instant hit. So, what exactly is NFT?
1. what is NFT?
The full name of NFT is Non-fungible-token, i.e. Non-homogenized Token, which corresponds to FT (Homogenized Token). Non-fungible Token is a uniquely identified, non-interchangeable Token that is not detachable.
It sounds abstract, so let’s start with homogenized Token: for example, ethereum, bitcoin, etc. I have a bitcoin and exchange it with one of your bitcoins, it doesn’t affect its value at all, I still have a bitcoin. Just like a 100 in my hand is interchangeable with a 100 in your hand (if you don’t consider the above coding inconsistencies).
But if I have a concert ticket in my hand, I don’t necessarily want to exchange it for a concert ticket in your hand, because the position of my ticket and your ticket is definitely different, maybe mine is in the front row and yours is in the last row, the seat number is clearly written on the ticket, there is a clear difference between the two tickets.
NFT is similar to a concert ticket in that each one is unique. And, unlike bitcoin or ethereum, which can be split into 0.1 or 0.01 pieces, NFT is indivisible. Just like a concert ticket, you can’t get in if you get half of it. So, what exactly is the use of NFT?
2. The value of NFT and application scenarios
We know that the Internet is a world where information can flow freely, whether it is text, pictures or video and other information can be transferred instantly to any corner of the world through the Internet, and it can be said that the Internet has greatly subverted people’s lifestyles.
However, when these words, pictures and videos are transferred, what is actually transferred are copies, and the originals are still kept locally. When a picture is spread by the Internet countless times, in the end, which is the original, which is the copy, who can still distinguish it?
NFT because of the characteristics of a unique identity, so loaded with NFT text, pictures, video equivalent in the digital world has a unique identity.
No matter how many copies of this information are made, the original with the NFT identity is the original. And NFT is based on the underlying blockchain technology, which allows information with NFT to be traded freely without the need for intermediary giants.
Blockchain is called the “Internet of value” because it completes the last piece of the Internet puzzle, solving the “double flower problem” of transactions without the need for third-party intermediaries. NFT is currently a shining pearl on the “Internet of Value”.
So, where exactly is NFT used?
In fact, NFT has many application scenarios, such as Christie’s auction NFT digital artwork, the artwork itself is based on blockchain technology, NFT that represents the work itself, NFT Token from the seller’s wallet to the buyer’s wallet, while the buyer completes payment, that means the end of the transaction.
Similarly, there are crypto game assets (such as the crypto cat that became a hit in 2017), crypto collectibles (NBA Top Shot sells NFTs of NBA stars’ highlight videos), etc., which can be derived to financial derivatives, personal identity data and other fields in the future.
Of course, in addition to these native crypto assets (NFTs developed based on blockchain technology), there are also some physical assets that issue NFTs, such as physical artworks, real estate and other physical assets, etc. These NFTs are actually just an online flow of identity credentials, which require a third-party intermediary with a high degree of trustworthiness in the real world to provide arbitration witness to ensure that the NFTs can correspond to the corresponding physical assets. Another category of Internet assets already exists.
Another category of Internet assets that already exist, such as domain names, also require third-party giant institutions to provide relevant authentication information, so that the NFT corresponds to the corresponding assets.
In short, NFT as a hot new thing, has quickly out of the circle to become the focus of more and more people. Although “the artistry of NFT auction items is too low”, “NFT is a complete bubble” and other comments, but the emergence of new things must be accompanied by a huge controversy.
We do not deny the existence of bubbles, but we believe that after the bubble is squeezed out round after round, the real value of NFT will gradually emerge.