What are nfts? a beginner’s guide

Even years later, blockchain games like CryptoKitties are at the top of dApp ratings. News headlines are more often overtaken by stories of non-fungible tokens selling for hundreds of thousand dollars. What are crypto NFTs and why are people saying it is one of the most promising blockchain technologies? The ChangeHero team prepared a guide to explain what are NFTs and how to participate before the trend blows up.

What are NFTs?

First of all, let’s sort through the term. What does non-fungibility mean?

Fungibility is a property of an asset which means it is interchangeable with any other asset of the same value. On the contrary, non-fungibility is synonymous with uniqueness. Even if two nonfungible tokens have the same value (for example, represent the same in-game item), they are not interchangeable.

How can this be useful? Like in the example above, NFTs can represent in-game assets like items, cards or pieces of art. Each token represents a unique unit of value, even if they belong to the same category. Basically, non-interchangeability is useful to determine ownership of an asset that NFT represents.

How did it start?

What NFTs are today is not the form they have always had. The first tokens were actually developed for the Bitcoin blockchain and were essentially non-fungible. They were called Colored coins and are considered predecessors of modern tokens. Another second-layer network to Bitcoin, Counterparty housed the first tokenized directory for Rare Pepes. Each of the entries in the library is unique and represented by its own Counterparty token.

Then, in 2015 Ethereum introduced smart contracts. Now, everyone could issue and transact with tokens even more easily. The only catch is that back in 2015 there was only one token standard — ERC-20. Nevertheless, Decentraland, CryptoKitties, CryptoPunks and EnjinCoin started implementing tokenized assets in games and digital art. It was after the success of these projects that the ERC-721 standard was developed in 2018.

What are NFTs standards we are talking about? The next section will explain.

How do they work?

NFTs are not exclusive to Ethereum, among the platforms that support them are Ravencoin, Qtum, EOS, Tron

• In essence, though, they are the same. Each token is assigned a digital hash that distinguishes it from every other NFT of its kind.

NFTs cannot be directly exchanged with one another because of their unique nature. Instead, they can be put on sale on special marketplaces for a cryptocurrency of choice.

What are NFTs other properties? They are:

• Non-interoperability: a nonfungible token cannot represent different assets in different games or apps;
• Indivisibility: there can be no more than a set number and no less than one of an NFT;
• Indestructibility: the data is immutably recorded on the blockchain;
• Verifiable: like any asset on blockchain, an NFT can be traced back to its original creator.

Find out the full article here.

https://changehero.io/blog/what-are-nfts-a-beginners-guide/

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