Have you wondered what so hype about NFTs is, and why they are always trending? There is a specific reason behind that. Let us take a look at NFTs and their importance in the present time. Non-Fungible Tokens knowns as NFTs are cryptographic assets on a black chain. They have unique identification codes and Meta data which distinguish them from each other. However, the point of interest is that NFTs cannot be traded like cryptocurrencies. Cryptocurrencies are identical to each other and for that reason, they can serve as a medium for commercial transactions. NFTs also represent the thing belonging to the real world including artwork and real estate. The tokenizing of these real-world items makes it easy to buy, sell and trade efficiently and it also reduces the chance of fraud. NFTs also function to represent property rights, the identities of individuals, and much more.
NFT has evolved from the ERC-721 standard. ERC-721 provides a minimum interface, security, and Metadata which are necessary for the distribution and exchange of gaming tokens. NFTs bear a high potential for many use cases. NFTs are based on block chains, and that’s why they can also be used to identify management, connect artists with the audience, and remove intermediaries. The current market of NFT is revolving around collectibles which include digital artwork, rarities, and sports cards also. One of the most hyped spaces to collect non-fungible tokenized NBA moments, and that too in digital card form is the NBA top shot. These cards have sold for millions of dollars in the market.
The question is how NFTs work. Minting is a process through which NFTs are created. In this process, the information of NFT is published on a block chain. On a relatively high level, the minting process often leads to the creation of a new block. The information is then verified by a validator, and this leads to the recording of information in the record.
NFT is the evolution of the concept of cryptocurrency. The modern finance system of this world allows trading and loan systems for different types of assets which range from real estate to lending of artwork. NFT has restructured the whole infrastructure by allowing the digital representation of physical assets. However, the idea of digital representation of assets is not novel, but when it is combined with tamper resistant block chain, it becomes a revolution. Market efficiency is the most obvious benefit of NFT. NFTs can also be used for investment by the fractionalizing of assets such as real estate. The tokenization can also be extended to other forms like the artwork which means can have many owners because of its digital equivalency, and each owner owns a fraction of the painting. This thing also increases the worth and revenue of the painting. Non-fungible tokens are secure and safe because it uses block chain technology. Though it is not impossible, but the distributed feature of block chain makes it quite difficult to hack.
