What exactly is a Non-Fungible Token or NFT?
A non-fungible token (NFT) is a unique, individual token existing on a blockchain sand has been widely adopting the cryptocurrency Ethereum. BUT Unlike a cryptocurrency each NFT token contains unique data
What that means is that a non-fungible token is not interchangeable with another non-fungible token,. This structure of NFT’s means they differ greatly from their fungible counterparts.
A Fungible token can be exchanged for the same type of token equally without any difference.
Let’s use a dollar as an example -
If you and I both have a dollar — we can swap dollars and it doesn’t matter, neither of us lose out they are equal. That’s what makes it Fungible.
Whereas, with non-fungible tokens they are both unique, meaning if we both have an NFT, mine could be a music video, and yours could be the title to your car — obviously we cannot exchange these two equally.
Therefore making our tokens non-fungible.
Non-fungible tokens are used to create verifiable digital scarcity. NFTs are used in several specific applications that require unique digital items.
This has initially proven popular for blockchain games and collectibles like CryptoKitties on the Ethereum blockchain. NFTs can also be used to represent in-game assets, which are in control of the user instead of the game developer.
One exciting benefit of this arrangement means the non-fungible tokens or digital items, may actually outlive the game they were initially created for and find incorporate into separate future games. Yet another potential use is in digital art, by helping prove authenticity and ownership.
Is An NFT The Same As An ERC-721?
The Ethereum community has adopted the ERC-721 protocol as a standard for Non-Fungible Tokens on Ethereum. Projects like CryptoKitties, CryptoCuties, and Decentraland follow the ERC-721 protocol for their NFTs. Mintable.app has also exclusively adopted the ERC-721 standard for our digital item creation service.
There are other blockchains and other formats that also contain non-fungible properties, however, the most viral use cases are all on Ethereum and the ERC-721 standard.
Non-fungible tokens first made their way into the mainstream when CryptoKitties went viral in December of 2017. The project went on to raise a $12.5 million investment.
Are NFT’s Use Cases Limited To Ethereum Gaming And Collectibles?
Imagine a world where every retail store sells items — not via bar codes but via tokenized assets. Meaning —every item of value has an NFT representing it; if you have a Prada purse and I say “Wow is that really a Prada?” your response would be to show the NFT representing your Prada and verify that it is the wallet address of the purse. Or when checking out and purchasing an item from the store— the cashier scans items via the address of the NFT and not by their barcode.
This is only one example and could be expanded on so much further — that is why it is so hard to grasp the future impactfulness of NFTs to our world. The possibilities are really only limited by the programmers ability to think of creative ways to use NFTs.
The changes to the way we interact with businesses could be vastly revolutionized if NFTs reached global adoption. This is, once again, why many people say NFTs will bring the next wave of adoption to blockchain. They just have so many use cases and impacts — how could they not be mass adopted?