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What is NFT and how to work in it

What is NFT

The NFT is called the main trend of 2021 in the blockchain. News from the NFT world is increasing. But there is little explanation of what NFT is. I wrote this article because I wish I could find one when I was looking for it.

In this article, I will tell you what NFT is, where it applies, how it will change, and what areas of life it will change. I will give you an overview of top NFT projects. I’ll make a plan of what to do first steps in the NFT.

Okay, since it’s an abbreviation, let’s start with the decryption.

NFT = Non Fungible Token. 

Not much of a clarification, unfortunately.

So let me put it: NFT is a technology that will have a huge impact on all areas of our lives. Because it allows you to digitize interaction with any virtual or physical goods.

Okay. But how does this work? So let’s figure out how the NFT works.

Non-Fungible (Non-reciprocal)

You may have heard of tokens. If you haven’t, I’ll tell you what it is below. But the whole revolution is the word “not removable”. Non-replaceability is a natural property of nature, we’re used to it, and most things around us are not amenable.

Non-reciprocal is considered to be a thing that is unique because of its characteristics and cannot be formally replaced with the same.

It is easier to explain with examples. Currency is a classic example of a fungible asset. Every dollar is equal to another similar dollar.

There’s more to it than that: your dog, for example. You’re not likely to agree to replace it with another dog of the same breed. Your apartment is unique. The phone, the car, the sneakers are also unique, although initially, they were no different from other models, in the process of owning them you made them unique.

Now let’s move on to the tokens.

Token

A token is the identity of the entity in the systems operating on the blockchain.

Blockchain has made it possible to decentralize everything. Decentralization is the elimination of a trusted intermediary who provides complex systems. You trust the bank to keep information about your funds. You trust the state to keep information and to confirm transactions with your property. If the information is stored in one place, it is easy to falsify.

Blockchain allows you to store all information about all transactions on thousands of computers so that it cannot be destroyed or forged.

The first mass use of blockchain was the cryptocurrency, namely Bitcoin – something you’ve probably heard about. All information about all Bitcoin transactions is stored on a variety of machines and is constantly updated, so no bank is needed to deal with this currency. And your money doesn’t just number on the screen, you own it, you can transfer it, or you can destroy it. This, by the way, leads to minus for cryptocurrencies. If you’ve lost access to them, no one will ever restore it. But, as we know, with great power comes great responsibility.

Then Ethereum came along. Ether author Vitalik Bouterin expanded the use of blockchain. He came up with smart contracts. These are contracts you don’t need a man to oversee. It’s just an executable machine code and it’s bound to work as programmed. The Ether has enabled complex transactions with different digital assets.

search more if you want to learn more about blockchain and smart contracts. I would recommend doing this to see not just what capabilities NFT provides, but why.

In the past, most blockchain services and applications used interchangeable tokens: bitcoin, Aitkin, ether, and others.

But it became clear that not all assets were inherently equivalent and fungible. And putting information about them in blockchains and having smart deals with them would be cool. That’s how NFT came into being. 

Non Fungible token

Thus, NFT is a digital certificate that represents a unique object.

We can attach NFT to any digital product, like image, video, audio, etc.

The token contains all information about the goods. A token is an exclusive right to the goods. By owning, buying, selling, or exchanging tokens, we do all these operations with the product itself.

Since tokens are stored in an open and distributed blockchain, information about the product, its owner, and the history of transactions with the product will always be available and reliable. We can always know who the product is made and who it belongs to at the moment.

NFT technology has the potential to tokenize, that is, transfer to the blockchain, any product. Even physical. But there are still a lot of challenges. But digital goods are ideal for tokenization simply by their nature.

What can you tokenize:

  • digital art
  • Game items: weapons, skins, characters
  • any objects in virtual universes, such as earth
  • anything

Why does NFT change industries?

Tokenization adds many benefits to any digital commodity that adds value to the product.

Effective ownership and inalienability

Now your digital asset is decentralized. It doesn’t depend on the system you’re in. This is especially true for game objects. You buy them, but you own them as long as the developer allows you. With NFT, you have a certificate of ownership. The other question is that the value of the game depends on how good the game is and whether it works, which is entirely up to the developer.

But this also applies to other digital assets. Let’s say you did a GIF with a flying cat, and it went all over the Internet. How do I now prove that you are the real owner? Thanks to NFT, this is easy. Attach token to the GIFC, and the GIFC belongs to you. Yes, everyone else can still download it, but you’re the only one who owns it. I’ll take a closer look at how “download” differs from “own” below.

Liquidity

No one will buy something that they’re not sure is original. If you can check the originality of a digital work of art, it’s easier to sell.

You cannot sell a legendary sword from the game unless the developers have planned a special marketplace.

The NFT-Sword from the crypto game can be sold on any marketplace. He will go into your purse, which connects to the game, and the game will see that this sword is now yours. Thanks to NFT, the value of a sword is not only that you use it to get high in the game. When you get tired of playing, you can sell it and have a girlfriend.

Universality

is commonly called Interoperability.

Previously, the items from the game were only in this game. Imagine if you could now use a sword from one game to slaughter terrorists into another. Or ride Raft through Weiss City.

Programmability

First, it means that complex mechanics can be embedded in the properties of a digital object. Like what kind of offspring your CryptoCotitic will have.

In addition, smart contracts have made it possible to make any complicated deals not only with currencies and financial instruments but also with things. For example, you can get a pledge for digital art or the same legendary sword from the game.

Right Click – Save Problem

And now the question I hear every fucking time I tell someone about NFT. Especially when it comes to digital art.

But I can just save this picture!»

Okay, this used to be the problem that made it difficult for those who created the digital work to live. Anyone could have kept it, and that copy was no different than the original.

Now, thanks to NFT, no.

Moreover, as the owner of the original work, I will tell you – “please save, Instagram, print on a T-shirt, spread my picture as much as possible! Let as many people as possible know about it”!

That’s how it works. When we create a rare NFT, 1 1 (the number of copies of this copy is the number of copies that exist) based, for example, on a painting that exists only digitally, we secure ownership of the original. And the value of this original will not diminish, but grow as the image itself is copied and distributed. Copies of the work will be distributed, more and more people will learn about your work, the cultural value of the work will grow.

Golconda. Its value is undeniable (unless you happen to be a radical futurist). You can put reproduction on the wall and look at it, you can download a jpeg with Gioconda on your phone, print it on your shirt, you can take a picture of the original in the Louvre. This will only increase the value of the original. This has been happening for many years. The more noise the Impressionists make, the higher their price.

And the same thing is going to happen with digital art. It’s full of analogy. You can put Beeple drawings on the desktop, but you don’t own them. And the owner gets the same benefits as the owner of the original Modigliani over the owner of the reproduction. It looks the same, but it’s not the same.

When we go to the Louvre, we know that we’re looking at the original. Blockchain is the Louvre. The value of a work is determined by the cultural context surrounding it. And blockchain records this value and its ownership, as it allows to confirm ownership and originality of any work.

Paradigm shift

This all seems very unusual.

We’re used to having a digital asset that’s freely copied. And copies are no different. But that’s because we’re used to assets physically. We’re not naturally digital. We still have to shift our paradigm to begin to understand what ownership of a digital product is and how its value is formed.

But our children and grandchildren who are born with a telephone in their hands will no longer need such a paradigm shift. They will feel the value of the original digital work, just as we feel the value of the physical work.

Where the NFT already works and how it changes these spheres

Games

The Games are now the largest sector of the digital economy with a variety of completely noninterchangeable items. And they can benefit very much from the introduction of NFT. Each game item becomes more valuable when tokenized. And so the game itself becomes more valuable to the user. And the developers will no longer have to use complex models to siphon money from the player.

Also, NFT and Blockchain make possible the Earn to Play model in games.

This is already happening. It is simply necessary to use unofficial marketplaces where there is little trust for both seller and buyer.

Any asset in a blockchain game is easily transferable by nature. Therefore, games can become a real income for many. In Axie Infinity, some third-world players earn more in games than they would earn off-line.

Best projects

  • Axie Infinity – The largest crypto game. You have to breed mythical creatures, Axie. Inspired by the Pokémon universe. Pets can fight. You can buy land for them and build a kingdom for them.
  • Gods Unchained is a classic card collection
  • Neon District – RPG cyberpunk style
  • So rare – football manager + collector
  • CryptoKitties – Cryptotoxicity Breeding Game. That’s where it all started

Art

CryptoRenessance – that’s what I like to call what’s happening to art now because of NFT.

As was the case five centuries ago, familiar values change before the eyes and are reflected in art. Just like five centuries ago, there was a technology that turned everything around. Then it was a print. Now it’s a blockchain. And most importantly, artists have finally received financial support that allows them to devote all their free time to creativity and to explore through it the changes that are taking place in society.

Some digital artists deny the singularity of “crypto art” as a separate direction. Yes, that’s a very broad term. But if you look long enough into the crypto art, it starts to look at you, it’s obvious that all of these pieces have more than tokenization in common. The choice of topics, styles, artistic techniques – all this creates a rather homogeneous world for which one can already single out a separate term “crypto art”, although not yet fully developed.

And now to bread for real. NFT programmability allows, for example, to make royalties automatic. That is, you will be able to get a percentage of every resale of your work. This will not depend on the intermediary’s willingness or unwillingness to pay you. The commission is in the smart contract and will go to your crypto-pen automatically.

Best projects

  • super rare is one of the first sites. For rare (1 1) editions of digital works. The high average quality of works and prices. Pre-moderation.
  • NiftyGateway is a top-level site for crypto art. They love mass drops when one work sells in multiple copies, + separately some VIP version 1 1 for expensive. It is they who organize most of the largest sales proceeds. People sold $3.5 million on NiftyGateway in a single weekend (although he had painted them for 13 years). It’s a tough pre-moderation, of course.
  • The Foundation is a young pre-moderated boutique venue.
  • Raible is the most democratic platform. Anyone can jam (that is, tokenize) their work. Done by Russian guys. But actually, Raible is not just for crypto art. It’s a marketplace for any NFT.
  • OpenSea is the largest marketplace of NFT in general, and crypto art in particular. Mostly secondary sales are made on OpenSea. But they have everything they need to get their work done. Just on OpenSea, it’s a little less convenient to promote them. But if you rely on your subscribers – OpenSea is an excellent choice.
  • Decentraland is the largest and most developed metauniverse. The Earth is already very expensive and scarce. And on it, users built a lot of interesting things. Games, virtual museums, medieval castles, and space bases. There are different events – parties with popular DJs, for example.
  • Cryptovoxels is an art-oriented virtual world. The best exhibitions are there.
  • Sandbox is more of a game than the metauniverse (the .game domain itself speaks for itself), although land sales and a complex economy are present. Supports VR. A wide range of embedded games.
  • TerraVirtua is not a metauniverse in the full sense of the word. It is rather a constructor for personal virtual spaces. In these spaces you can, for example, display your NFT collections. Anyway, if you’ve been dreaming about a nice garage or a bar in the basement, then the TerraWirtua will let you build one in the virtual world. So the obvious problem is, you’ve bought a couple of million NFT paintings, collectibles, armor, and swords. Where do you put them? You have to show them beautifully. And Terravirtha lets you do that. They’re actively supporting AR and VR, by the way.

Collecting

It is the second sphere of life after art on which NFT technology has had the greatest impact. Moving from physical collections to virtual collections was not so difficult. I think it was because, as with art, tokenization added value to these items, creating new useful properties, and eliminating imperfections. Virtual sports cards, for example, are not just pictures, but also videos and anything else. It’s easier to sell and change, and NFT cards don’t spoil.

In general, collecting is what I think is driving NFT and blockchain to the mainstream right now more than bitcoin.

Buying NFT

If you do not have 5 free broadcasters and you are not yet an expert in the NFT market, it is better to start the purchase with low-cost lots on Rarible or OpenSea. Focus on your taste and what you like. Not every NFT you can resell later is more expensive, so buy the job you want to own. Or the work of the author you want to support. Russian-speaking artists hang out, for example, here and often throw references to their work so that you can support compatriots.

Do not forget that besides the price of NFT itself, you will have to pay for the gas. Depending on the network load, this can cost you 0.03 – 0.07 ETH.

There are instant purchases, there are auctions.

On Raible buy easier, on OpenSea harder – there comes a new entity with or wrapped ether. But it’s also designed to save on gas, so take a little complexity with understanding. All the intricacies of NFT purchases require separate hides, of course.

Release its NFT

The release of its NFT, that is, the tokenization of an object, is called minting.

The easiest way to cover your work, even if you have drawn it in 5 minutes in Paint Cinema 4D – do it on Rarible or OpenSea.

On Raible, your work will fade immediately, so you will have to risk and pay for the gas. And there – buy or not buy – depends on the work.

Open sea – uses lazy minting – that is, you only prepare everything for the minting, and the actual release of NFT with the recording in the blockchain and, accordingly, the gas flow, will occur only if you have a buyer on your job.

I will not go into the details of the difference between releasing work under its token (requiring much more gas) or under the site token (RARI, for example), but both of the largest marketplaces allow to do both.

Conclusion

NFT technology allows to digitize and make more convenient interaction with any product. Ownership, purchase, sale, authentication.

Tokenization adds value to the product.

NFT is called the main trend in blockchain in 2021.

This technology has already revolutionized art, the next game.

Any product that cannot be eaten is likely to be tokenized.

Future work

The NFT theme is huge and there are still more questions than answers. 

Sources

  • WTF are NFTs
  • NFT Bible
  • Into the void

 

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