How Do NFT's work? What is their impact on business?
Non-fungible tokens (NFTs) are currently the hottest topic in the crypto world, with Ethereum being the most popular platform to create them on. However, many people are still unsure what they are, how they work and what their long-term value might be. This article aims to shed some light on the matter and provide insights into the future of NFTs while discussing their current and immediate impact on blockchain adoption.
Introduction to Non-Fungible Tokens (NFT)
Non-fungible (or unique) tokens are gaining popularity as they have a host of potential use cases in both digital and physical spaces. Here is an introduction to what they are, what they’re being used for, and how they’re transforming markets. What Are Non-Fungible Tokens? What makes a token fungible? The nature of fungibility means that one unit can be substituted for another equal unit. For example, if you were to trade your $1 bill for my $1 bill, there would be no difference between our bills—they would both be worth $1. If we were trading cars or houses, however, there would be a difference between them. A non-fungible token (NFT), on the other hand, has some aspect that makes it unique from other units of its kind—in other words, it's not interchangeable with others like traditional tokens. Some examples include collectibles like CryptoKitties and rare baseball cards; event tickets such as those available through Ticketmaster; or even real estate properties such as those sold by Propy or BlockReach.
The History of Collectibles
In-game items have been around since gaming began. From coins to cartridges, players want to show off their accomplishments in a physical way. But some recent developments are making collectibles into a much more complex concept. Game developers are slowly adding options for non-fungible tokens (NFTs) as an alternative to regular in-game items. And if NFTS catch on, they could transform gaming culture into something new entirely—allowing us to link video games with real-world value forevermore. Here’s what you need to know about these new in-game assets, how they work, and why we need them now more than ever before.
CryptoKitties Case Study
CryptoKitties, released in late 2017, is an online video game that allows users to collect virtual cats with unique attributes. Players can purchase new kitties using Ether or breed their own with other players’ cats. Each CryptoKitty has its own genome that can be passed down to kittens once two CryptoKitties are bred. Cryptokitties proved so popular at launch that it caused a major backlog of transactions on Ethereum’s network in December 2017. The company behind CryptoKitties raised $12 million in funding through venture capital firm Andreessen Horowitz and Union Square Ventures. The platform generated $12 million USD worth of sales within just two weeks after its release. There were more than 250,000 people playing CryptoKitties at one point, which equates to roughly 10% of all Ethereum users worldwide.
ERC 721 - The Standard That Helped Create CryptoKitties
ERC 721 is a standard for non-fungible tokens (NFTs). It describes how to build tokens that are unique, using EIP 618. In layman’s terms, it means there can be one-of-a-kind items in games and other platforms. For example, CryptoKitties are built on top of ERC 721. If you own one CryptoKitty, no one else can have it; you own it forever. You can even breed your CryptoKitty with another CryptoKitty to create an entirely new kind of token! This standard has been adopted by many other crypto projects including Decentraland and Cryptokitties’ sister project KittyVerse.
ERC 1057 - An Extensible Interface for Game Items on Ethereum
The ERC 1057 token standard is an extensible interface for game items on Ethereum. This proposal seeks to establish commonality between items from different games, potentially increasing the liquidity of individual items, and enabling them to be treated as valuable collectibles across multiple games. Following in line with other token standards such as ERC-20, ERC-1057 provides a basic set of functionality required by any game item standard.
Conclusion & Final Thoughts
Many of today’s businesses rely on technology to function but are only vaguely aware of how it actually works. The most effective way to learn about new technologies is to dig in and get our hands dirty. In order to truly master a new piece of tech, it’s essential we not only understand how it works internally but also its potential applications. Today, we explored how non-fungible tokens (NFTs) work, their impact on Ethereum as a platform, and what they mean for future blockchain projects. If you have any questions or would like to add your own insights into non-fungible tokens or blockchain development as a whole, please leave them in the comments below! And don’t forget to check out our other Blockchain 101 posts for more information about Ethereum smart contracts and security tokens!