Non-fungible Tokens (NFTs) becoming more popular
Being the latest trend in the crypto space, Non-fungible tokens otherwise referred to as NFTs are assets on blockchain with unique codes and metadata that distinguish them from all of the others. They have also been referred to as digital art or tokens.
Unlike cryptocurrencies, Non-fungible tokens cannot be exchanged nor be used as a medium of payment for goods and services bought. To get an idea of what NFTs are, we have to understand fungibility and what it entails.
Generally, this refers to the ability of an asset to be replaced by another of the same value or worth. To explain further, a $1 bill is equal to another $1 bill. If for example, you take $1 from your friend to get coffee, you do not have to return the exact note to him. You can return any $1 bill as they are all of the same value.
Unfortunately, this is not how non-fungible tokens work. They cannot be shared nor are they of the same value. The value of 1 NFT is completely different from that of another.
Features of Non-fungible Tokens
1. Unique - NFTs are unique in the true sense of it. There's a unique and specific tag on each NFT that describes what it is for. This is unlike cryptocurrencies.
2. Mostly indivisible - unlike Bitcoin that is made up of Satoshis hence divisible, NFTs are mostly indivisible. You can either buy the entire item or nothing at all. They mostly represent digital arts, recordings, or unreleased songs.
3. Limited - the increasing value of NFTs we've witnessed in the last three months is a result of their scarce nature. Being unique and limited tokens, their value tends to appreciate.
Advantages of NFTs
Having revolutionized the digital art space, NFTs offer artists and content creators a ton of opportunities. A few of the benefits of these tokens are:
1. Ownership right - when you purchase an NFT, you possess exclusive ownership rights to the token and the accompanying collectible. For example, most artists and content creators create NFTs and auction them on various marketplaces. Oftentimes, the NFTs are mostly their songs or artwork which are sold off to the highest bidder. The Weeknd’s NFT drop as reported by BTC Peers is an example.
2. Trustworthy - leveraging the transparent and efficient blockchain technology, NFTs are trustworthy. When you buy one, you are guaranteed a legitimate piece of art and token.
3. Hassle-free transfers - NFTs are remarkably easy to transfer. These tokens are auctioned and bought on marketplaces, thus, making them incredibly easy to transfer.
Top NFT Marketplaces
1. OpenSea - arguably the best marketplace in the NFT space, OpenSea enables the auctioning and purchase of all kinds of digital arts with cryptocurrencies like Ethereum.
2. NBA Top Shot - basketball-themed, this marketplace leverages basketball fandom and blockchain technology. It is currently one of the most valuable projects.
3. Rarible - playing host to a ton of NFT sales, Rarible is one of the best marketplaces. Built on blockchain like all of the others, Rarible enables multiple crypto payment options.