Since the dawn of crypto, there has been a lot of improvement and additions to the industry. Apart from the usual tokens, the non-fungible tokens or NFTs have taken the world by storm.
During the latter part of 2021, everyone on the internet is raving about how portraits of digitally drawn monkeys are sold for almost 10 million dollars.
This became a sensation that almost every crypto enthusiast has jumped into the trend. However, the absurdity and sudden skyrocketing of NFTs have left most people wondering how it works and what it is.
Are you curious about how these digital assets can change the tide of the crypto sphere? Discover everything you need to know here at Casino Days India.
Understanding non-fungible tokens
Non-fungible tokens are digital assets that represent real-world objects such as art, real estate and anything you can think of. Moreover, it also means that you cannot easily find something that is of equal value and quality to replace the token.
Almost all of these tokens are available online, and you can purchase them using cryptocurrency. Non-fungible tokens represent real-life assets such as in-game items, music art or even real estate contracts. Usually, their value is determined by their rarity and popularity among collectors. NFTs can be traded online and purchased through cryptocurrencies.
How do NFTs work?
Beyond its glamorized appearance on the internet, NFTs are simply tokens that exist within the Ethereum blockchain. Each one of these has valuable information such as the creator and transferring of ownership.
Moreover, they are individually unique and cannot be replicated once they are released in the blockchain network. That is why the values of each token continue to rise due to demand.
Different NFTs you should about
Anything in the real world can be an NFT. It can be something as random as a picture or as grand as a plot of land Here are some examples you should look into:
- Bored Ape Yacht Club
Have you ever thought about owning a monkey? If so, the Bored Ape Yacht Club (BAYC) allows you to turn that dream into a reality. Although with them, you are buying an image of a monkey with a bored expression. At first glance, these tokens can appear as an ordinary art of apes, but the prices of each can cost you millions of dollars.
Before it became popular, the Bored Ape Yacht Club started as an idea of a world where rich apes are living in a swamp clubhouse. From there, the anonymous creators hired freelance artists to paint and create over 10,000 original apes. Each one of them has different combinations of colours, fur, outfits and accessories. Although, their common denominator is the bored expression on their faces.
Once tokenised as NFTs and uploaded to the Ethereum blockchain, the Bored Apes Yacht Club became instantly popular overnight and skyrocketed into a whopping six-digit value. Their data in the network are all unique and recorded, which jump-started their fame on the internet. After overnight online hype, the prices of each token transformed into six digits. This made all the current owners become royalty among the NFT society crowd.
Another NFT worth looking into is CryptoKitties. In essence, it is a game that lets you collect, breed and sell virtual cats for fiat currency. Its interesting premise has attracted a lot of people and resulted in the creation of almost two million kitties. Each one of these kitties is unique and one-of-a-kind, and you cannot replicate, take away or destroy.
Starting the game requires you to create an account and purchase virtual cats. Having one cat is enough, but you will need to cooperate with another player. That is why some starters would buy two cats at once, so they can easily begin breeding. Aside from that, the interesting thing about this game is that it runs on Genetic Algorithms. The code present in each kitten serves as their DNA, and this can be traced within generations of breeding.
- Axie Infinity
Alongside the rise of NFTs, there is also the emergence of play-to-earn (P2E) crypto games. This form of entertainment allows you to play and accomplish missions, so you can receive NFTs as a form of reward.
An example of this is Axie Infinity, a game that lets you battle with cute monster beans. The characters you use are NFTs themselves because of their unique qualities and rarity. As such, you can also trade monsters with other players to strengthen your build.
The advantages of NFTs
With the diversity and possibilities of NFTs, you have the following advantages you can benefit from:
Good marketplace efficiency
Transforming physical assets into digital makes the marketplace process easier since intermediaries are eliminated. Moreover, the supply chains are further strengthened as well as the security through the use of blockchain technology.
Safety and security
Since NFTs are powered through the Ethereum network, the security is full-proof and makes the transfer of ownership and data breaches impossible.
Fractionalising ownership of physical assets
Dividing the ownership of physical assets is quite difficult, and it would take a long time before you can reach a point where you get a fraction. On the bright side, converting these assets into NFTs will make it possible for them to have multiple owners at once.
The disadvantages of NFTs
While NFTs have their appealing sides, it also has their disadvantages. Some of them are the following:
Like everything else in the crypto market, assets follow a volatile market including NFTs. Additionally, they are not liquid enough so using them for daily transactions can be difficult.
As more NFTs enter the Ethereum blockchain, which require more electrical energy for computation. This is already an issue with cryptocurrency, and the entry of NFTs is not helping the situation improve.