Non fungible token, or NFT's or tokens that are created using the smart contracts in the blockchain. NFT's are created on ERC-721 token standard. The NFT tokens are different from each other and are not similar, one cannot replace another token issued on the blockchain. In this guide we explore what they are, how they work, and how they're being used.
Lets first understand what are fungible token? What are non fungible token? What makes NFTs so special? How are non fungible tokens used? Why should U invest in Non-Fungible Tokens? Who's making waves in the NFT space? and finally NFT's and DeFi.
What are fungible tokens?
Every token that is being created currently using ERC20 standards and TRC20 standards and other blockchain altcoins and bitcoins are fungible tokens. Meaning u cannot differentiate between each token. For example, if u send a bitcoin to some one and u received it back u cannot say it is the same token or different token u cannot differentiate with one another all are same.
Fungible tokens are fully exchangeable with each other. Fiat currencies are one example of fungible assets; a US dollar bill has exactly the same value as any other US dollar bills. They are transferred from one owner to another in order to pay for things. However, exchanging one dollar bill for another dollar bill usually does not make sense as they are of exactly the same value.
Fungible tokens are typically used for tracking balances and making payments. An example use case is binding the tokens to an organization’s account balance in a payment account, so that payments can be done with token transfers, and periodical netting and settlement can be done by querying the resulting token balances.
With fungible tokens, each account maintains a balance based on the amount of tokens the account owns. Tokens can be easily transferred to other Ethereum accounts through swap techniques or direct transactions. Just like bank transfers, when a token transfer is executed, the source account is debited the amount of the transfer, while the beneficiary account is credited the same amount.
What are non fungible tokens?
At first u can create NFT's only using Ethereum with its ERC71 standard, now u can create NFT with NEO, EOS and TRON. The main difference between Non fungible token and fungible tokens are each token has its own indicator, a digital signature, its own unique value, has a unique id, its own owner.
U cannot swap a non fungible token with other non fungible token in the same way u do with the fungible token. All the information in Non fungible tokens are recorded in their smart contracts. U also cannot devise a non fungible token in the same way u do with fungible tokens. For eg, take bitcoin u can devise the token into 8 decimals u cannot do the same with fungible tokens.
NFTs support ownership transfer and they can also be traded. Alice who owns a token representing a production batch of Scottish whiskey may trade it for a token representing a case of Bordeaux wine.
Another example use case is assigning a non-fungible token to a real estate property. It can be transferred from the Ethereum account of the bank to another Ethereum account of the house owner once the mortgage is paid off.
What makes NFTs so special?
Non-fungible tokens have unique attributes; they are usually linked to a specific asset. They can be used to prove the ownership of digital items like game skins right through to the ownership of physical assets.
Other tokens are fungible, in the same way as coins or banknotes. Fungible tokens are identical, they have the same attributes and value when exchanged.
Why Should I Invest in Non-Fungible Tokens?
It creates a unique value for your tokenized asset and its value can go up many times in the future.
It provides more liquidity to the investors.
It has a very much potential for growth and development.
Who's making waves in the NFT space?
Terra Virtua
Terra Virtua is the first fully immersive, blockchain-driven VR entertainment Platform. Terra Virtua is a unique virtual platform, focusing entirely on immersive VR entertainment, built around a strong community and social connection. Supported by developers, run by industry leaders and secured by blockchain, Terra Virtua is the platform for the next generation and dimension in entertainment and engagement.
Terra Virtua will have its own robust, secure blockchain based economy. Zones, in-game items, skins, upgrades and unique experiences can be bought and sold within Terra Virtua, driven by their token, the Terra Virtua TERRA (TVA). TVA owners will be a vital part of the ecosystem, kickstarting the Terra Virtua economy.
The Terra Virtua Digital Art Gallery brings a whole new dimension of stunning visual works by top artists - browse still and animated digital works created especially for the Terra Virtua Connoisseur Collection in our 3D Virtual Gallery.
Terra Virtua is changing the face of digital artwork - come and experience the renaissance!
SuperRare
SuperRare is a marketplace to collect and trade unique, single-edition digital artworks. Each artwork is authentically created by an artist in the network, and tokenized as a crypto-collectible digital item that you can own and trade.
You can think of SuperRare like Instagram meets Christies. A new way to interact with art, culture, and collecting on the internet!
Each artwork on SuperRare is a digital collectible– a digital object secured by cryptography and tracked on the blockchain. That’s just a fancy way of saying they’re provably scarce items that can be collected, and that hold value just like cryptocurrencies like ether and bitcoin.
Decentraland
The Decentraland DAO owns the most important smart contracts and assets that make up Decentraland – the LAND Contract, the Estates Contract, Wearables, Content Servers and the Marketplace. It also owns a substantial purse of MANA which allows it to be truly autonomous as well as subsidize various operations and initiatives throughout Decentraland.
Decentraland is the first fully decentralized virtual world. It was always part of the original vision to hand over control to the people who create and play in this virtual space. In short – you, the users. Through the DAO, you are in control of the policies created to determine how the world behaves: for example, what kinds of wearable items are allowed (or disallowed) after the launch of the DAO, moderation of content, LAND policy and auctions, among others.
NFTs and DeFi
Non-fungible tokens are also making waves in one of cryptocurrency’s most intriguing and innovative spaces, the decentralized finance (DeFi) space.
One Example of How NFT's are being used in DeFi is NFTfi.
NFTfi
NFTfi is a hybrid platform that takes the best aspects of DeFi and combines them with the growing value of the non-fungible token (NFTs) sector.
Put your NFT assets up as collateral for a loan, or offer loans to other users on their non-fungible tokens.
Put any ERC-721 token up for collateralization. Other users can now offer you a loan.
If you accept a loan, the ETH gets paid out from the lenders account to you, and your NFT gets locked in the NFTfi smart contract.
Once you repay the loan the asset will be transfered back to you. If you don’t pay back the total repayment amount before the due date, the asset will be transferred to the lender.
Lending on NFTfi is ultimately about providing liquidity to another user, the borrower. In our contract you as a lender exchange your loan in wETH for a claim to their NFT, which is used as collateral in the transaction.
As a lender you set the loan value, the interest and the duration of the loan. That means we are in full control of our own risk, for good and bad. This piece aims to explore some of those factors in more detail and see how they play a role in different lending strategies. …
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Well, in the Bitcoin Cash community, We're now currently creating NFT-type SLP tokens for a game called Enter The Sphere, basically a collectible card game.