Non-fungible tokens are unique tokens in the sense that each token is unique and cannot be replaced by another token. This is in contrast with “fungible tokens,” which are tokens where one unit of the token is as good as another. For example, let’s say you have 10 apples. They are all the same type of apple and have the same value. You can split those 10 apples into 5 groups so that each group has 2 apples. Now, let’s say you have a bag of potatoes instead. Those potatoes are not interchangeable – there could be small ones, big ones, ones with brown eyes or blue eyes – each one is different from another. Therefore, if someone stole one of your potatoes, you couldn’t just give them another one because they’re all special and different from each other! If you think about it, most real world things aren’t fungible – your house isn’t interchangeable with another house because no two houses are exactly the same; your car isn’t interchangeable with another car because no two cars are the same; your camera isn’t interchangeable with another camera because no two cameras have exactly the same features etc. These properties make non-fungible tokens highly useful for developers trying to build video games or other virtual environments that require ownership of virtual assets such as characters, items, or locations.
How can you use NFT?
NFTs provide a unique token that represents a unique entity. These tokens always exist on the blockchain, and so therefore can be used for the transfer of value between parties without the need for centralized control. – Virtual items in games are given a unique identifier on the blockchain. Therefore, they are non-fungible, meaning that no two items are the same. That’s why you can have a marketplace where people can trade items with each other that they have collected. – So, your gaming company can create an NFT, and then give its users the ability to trade those assets with each other. You can even allow the transfer of ownership of those assets, or create a marketplace where you can charge a percentage of each transaction!
The potential of NFT
The real potential of NFT is in enabling the trade of unique digital assets. This can be applied to a multitude of use cases, for example: – Gaming: Virtual items in games like CryptoKitties or other collectables like CryptoPunks are non-fungible tokens. They are unique, whereas most in-game items are fungible because each can be replaced by another if one was lost or stolen. – Real-world assets: The ownership rights for real estate, gold, art, or other physical items can be digitized with NFTs. Therefore, instead of a piece of paper saying that you own something, you have a digital token that represents your right to own that asset. Your token can be transferred like a bitcoin, meaning no central authority has the power to take it away from you.
Why are NFTs important?
– CryptoKitties, which was one of the early games to use NFT tokens, demonstrated the potential of the NFT model. Due to the unique nature of the collectables, CryptoKitties was able to attract a huge amount of interest, with people spending thousands of dollars on the digital cats. Now, other games have followed suit, and developers are increasingly using NFTs to build their games. – In the future, we can expect NFTs to become even more important and relevant. This is because blockchains like Ethereum are scalable, and can therefore handle much higher volumes of transactions compared to what they can currently process. In the future, we can expect games to generate hundreds or thousands of transactions per day, potentially making them more valuable than some of the world’s largest apps.
Bottom line
Ultimately, NFTs are important because they can enable the digitization of real-world assets that have previously not been available for trading on the blockchain. The potential of NFTs is only limited by the creativity of developers and their ability to come up with creative use cases for the unique tokens.
