NFT

(7 minutes of reading time)


There is no doubt that, in the technological landscape, the word NFT has been talked about a lot in recent times. Abbreviation for “non-fungible token”, its meaning may not be very clear to everyone. To learn more about it, read our text today.


WHAT IS NFT?

As we have already said, NFT is the acronym for "Non-fungible Token". The idea to understand what NFT is, and its application lies in whether a good is fungible.

In economics, fungible goods are those that are not unique and are interchangeable, for example, a $1 coin is a fungible good because if you exchange it for another, you still have $1.

Now imagine a super-valuable work of art that is unique and coveted by collectors and museums around the world. If you exchange this art for another painting, you will no longer have the first art, as they are different objects, so, works of art are examples of non-fungible goods.

In short, when exchanging one non-fungible good for another, you end up with a different product, as the new good will never be the same as the good you exchanged for.

We know that just by the name or by the translation it is very difficult to understand the meaning of NFT, but if we think of something digital that does not have a cash value, but for some reason comes to have a value associated with it. A good example is the sale of memes on the internet. In fact, the use of these memes is free and when you buy a meme you become the owner of it, and you can charge for people who use it. This is NFT.

In short: NFTs are a type of digital signature, verified by blockchain, that transform unique digital media into originals against common copies, that is, goods that cannot be replaced by others of the same kind, quantity, and quality, such as works of art, for example.


HOW IT WORKS?

How NFT works is no different from blockchain and cryptocurrencies. Like tokens and cryptocurrencies, they are part of a blockchain, such as Ethereum. But they carry different information, which makes them work differently than a token.

The NFT works as a unique digital seal of authenticity, impossible to be corrupted, reproduced or even violated.

The main difference between NFT and Bitcoin is that anyone, in theory, can mine Bitcoins and exchange them with the network because the bitcoin generated here or anywhere in the world is indistinguishable and have the same value. NFTs, on the other hand, can also be defined or generated by anyone, but this does not mean that an NFT linked to a product will have sufficient market value to be exchanged for another, or for an amount.


HOW TO CREATE NFT?

If you are digitally savvy, the process to create a NFT is not complicated.

First, you must have a digital wallet compatible with ERC-721 tokens from the Ethereum network, one of the most used in these transactions. Then you will have to deposit an amount of this cryptocurrency in your wallet to pay the fees (which range from $70 to $200).

You will also need to authorize the connection of the wallet with some intermediation market (such as OpenSea). After that, you need to start the process of creating the articles as NFTs to sell them individually or as a collection.

Finally, just validate the process within the platform so that your NFT is created and ready for commercialization.


WHAT IS NFT USED FOR?

Nowadays, NFTs are gaining ground due to their use in digital artworks, but they can also be used in any digital product that the author or owner deems necessary to define as their authorship, as a way of maintaining their originality so that can be marketed.

A good example of the use of NFTs is the game CryptoKitties, a digital trading game tied to the Ethereum cryptocurrency. The game consists of a large digital marketplace where players trade digital kittens associated with NFTs. Each of them is different from the other and has an NFT certificate that makes them unique from the others. As in every market, there is speculation, exchange, and the player's interest in seeking to acquire the most special or valuable digital kitten.


NFT TODAY

The rise in interest in NFTs came from the sale of Mike Winkelmann's “Everydays: The First 5000 Days” (the Beeple) for $69 million. This sale took place at an auction organized by the house Christie's, which specializes in auctions of very valuable works of art, in March 2021.

The work is a collage of works that follow the artist's evolution over time. The buyer who disbursed the fortune gained access to the NFT, the image itself and, also the rights to exhibit and exploit the work.

As the auction was worth millions and took place in an auction house very famous for operating auctions with traditional works of art, the sale ended up gaining prominence, validating the use of NFTs in digital art.

Another recent application of the NFT was that the Kings of Leon group used the technology to auction items among fans and raise over $2 million for charities.


HOW TO SELL NFT?

To sell NFTs it is necessary to use some intermediation market, such as OpenSea, SuperRare and Rarible.

It is also necessary to have a programmable digital contract (smart contract), which works like a contract itself and must contain information regarding the rules and obligations of the parties involved in the NFT negotiation.

After that, all you must do is make the audience interested in your product. And apparently, today, you can make money with NFTs.


NFTs IN THE WORLD OF GAMES

The area of digital games is also very connected to NFTs. Today, we already found
several games that use this system for negotiations and awards, among the most popular are: Gods Unchained, Axie Infinity and Spinterland.
 
Other major game companies are also betting on the NFT. Konami, creators of the classic Castlevania series, recently held an auction to sell several NFTs pertaining to the franchise. Square Enix, famous for the Final Fantasy franchise, has also signaled interest in NFT.

The NFT has been around for a while, and we're sure to hear a lot about it in the years to come. Either because of more digital works that will be sold for high prices or because of their adoption in more segments of the most different industries.


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