WHAT IS NFT?
A non-fungible token (NFT for short) is a token that is firmly linked to a unique countervalue. It cannot, therefore, be exchanged for any service like a cryptocurrency token, but is only valid for an individually defined countervalue, e.g. for a digital work of art. A non-fungible token can therefore also be thought of as a kind of digital proof of ownership.
A Non-fungible Token (NFT) is a special token on a blockchain that can be used to prove ownership of something. You can think of NFTs as a digital representation of an asset, but one that cannot be traded. Thus, a Non-fungible Token cannot be freely used as a means of payment like other tokens but serves solely as proof of ownership of a specific thing. Each non-fungible token thus indirectly has an individual value that depends on the thing linked to it.
If something is fungible, it is an asset that can be exchanged 1:1 for other assets of the same type, quantity, and quality. The value of a unit always remains identical. A gram of gold can be exchanged for another gram of gold, and a 5-euro bill can be exchanged for another 5-euro bill. Many different goods can be fungible if they have a purely material value. For example, one could exchange a bag of pepper for another bag of pepper of the same kind, quality, and quantity without making a profit or loss. We can also say, in simplified terms, that if a value is fungible, it is equally interchangeable.
Accordingly, non-fungible means that the value is not interchangeable with other values of its kind. It is unique in the same way that an object of historical or artistic significance is unique. Even if one exchanges a historical porcelain figurine with a second figurine from the same limited series, they are still two different objects, each with its own provenance. Each object exists exactly once. It can be traded in exchange for a fungible value (e.g., money), but cannot be replaced by a comparable object or with an equivalent value if lost or destroyed. The owner can be clearly assigned to the individual object.
A non-fungible token represents the ownership of an object. Just as a car’s registration document proves ownership, and NFT does the same for the thing linked to it. Importantly, NFTs do not necessarily have to be limited to digital goods. It only has to be a non-fungible possible thing to which one can legitimately lay sole claim. The token can then be used to prove beyond doubt that one owns this thing. No one else can lay claim to this individual item.
NFTs can thus be offered for a wide variety of non-fungible goods.
They are used, for example, to trade digital artworks. For example, on March 11, 2021, an NFT for the work “Everydays: The first 5000 days” by Mike Winkelmann was sold for about $69.3 million. This is a digital work of art that can theoretically be copied as often as desired – but only one person has acquired the right to call himself the owner with the NFT.
Online, NFTs for digital collectibles are offered all the time. For example, there are auctions for digital baseball cards. Other digital goods have also been sold with NFTs. For example, Jack Dorsey, the founder of Twitter, offered his first tweet for sale. Videos, music and digital assets for video games can also change hands via NFT.
How do non-fungible tokens work?
Non-fungible tokens are built on existing token platforms such as Ethereum and EOS. The core of an NFT is a special data structure that can be used to represent unique properties of an asset. In the case of game tokens, they could represent your high score or your rank on a leaderboard. In the case of real assets such as cars, houses, or other collectibles, they might represent an ID or serial number. It is these unique properties that make NFTs so powerful. Because these tokens can be used to represent unique values, the tokens themselves become interchangeable links to those values. So when you own a car token, you really own the car. You can still trade the token, but when it is sold, ownership of the car passes to the new owner. This is similar to trading a car with a specific VIN, except you are trading a digital token instead of a piece of paper. So when you own a non-fungible token, you are not trading in a commodity. You are trading a specific asset. It is this feature that makes Non-fungible Tokens so unique.
Advantages of NFTs
The use of non-fungible tokens has many advantages. Perhaps the biggest advantage is the tokenization of real assets. With Non-fungible Tokens, you can tokenize anything. You can tokenize your car, your house, or even yourself. Imagine an NFT that represents exactly one person in the world. If you own that token, you are that person. Anyone who wants to deal with that person must contact you. This can be used for all sorts of applications, such as identity verification, ownership of virtual worlds, or even real estate. Another big advantage of non-fungible tokens is the ability to add metadata to specific tokens. With fungible tokens, you can’t change the token itself. With non-fungible tokens, you can add metadata to each token, such as the owner, dates, and other metadata that does not affect the token’s fungibility. You can also add a unique identifier to each token so that you know exactly where each token came from and where it is going.
Disadvantages of NFTs
n spite of the advantages of non-fungible tokens, there are also some disadvantages that they bring with them. One of the biggest criticisms of Non-fungible Tokens is the high cost of creating and managing them. Creating a new Non-fungible Token requires about 5,000 “gas-fees” on the Ethereum blockchain, which costs about $25 at the time of writing. That may not seem like a lot of money, but if you create a whole bunch of Non-fungible Tokens, it can add up quickly. The cost of managing Non-fungible Tokens is also much higher than that of fungible tokens. With fungible tokens, you can simply exchange one token for another, but with Non-fungible tokens, you have to exchange the token and then use the asset behind the token. This can really add up if you are trying to manage a lot of assets with Non-fungible Tokens.
Where can you buy NFTs?
There are several exchanges that trade non-fungible tokens. Some of these exchanges focus on gaming assets, like openSea and OPSkins, while others focus on real assets, like RareBits. If you’re looking for a specific token, you can use an exchange search engine like CoinSearch.io to find out which exchanges list that token. You can also use an exchange to buy tokens that are not listed on other exchanges. This can be a little risky, but it can also be the only way to get certain tokens. When you buy a particular token, make sure it comes from a trusted source. You don’t want to buy a token that is fake or fraudulent, so make sure you do your research before buying.
GameStop launches new NFT marketplace
The cryptocurrencies are falling, and major crypto players like Coinbase and Blockfi are laying off employees by the dozen. This is also the case at video game retailer Gamestop, whose sales are stagnating and which recently had to lay off 160 employees. And yet, the market capers there don’t seem to be a cause for alarm. Because right now – in the middle of the crypto crisis – the chain has launched its long-awaited marketplace for non-fungible tokens (NFT). Gamestop has been tinkering with the marketplace, which is based primarily on the Ethereum blockchain scaling solutions Immutable X and Loopring, since the fall of 2021.
In a so-called “public beta” version, the marketplace is live, but still very error-prone. Anyone who tries to access the site at nft.gamestop.com currently gets a 403 error with the message “The request could not be fulfilled”. Theoretically, however, you could already create, buy and sell NFTs on Gamestop’s NFT marketplace.
According to The Verge, Gamestop’s new platform lists more than 53,000 NFTs in over 200 collections. In order to carry out transactions on the marketplace, users need a so-called crypto wallet. Conveniently, Gamestop launched the new Gamestop Wallet for cryptocurrencies before the NFT platform in May. Alternatively, well-known options such as Walletconnect can also be used. The Verge also talks about users having to apply to create new NFTs.
Gamestop continues to have big plans for its NFT marketplace. In addition to the actual non-fungible tokens, the retailer plans to expand the platform to additional categories such as Web3 gaming, according to a press release from the company. A future update to Immutable X is expected to enable access to NFT with integrated games, such as Illuvium or Gods of Chain.