NFT Novice Science Popularization: Summary of Seventeen NFT Most Frequently Asked Questions
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The full name of NFT is Non Fungible Token. Chinese is a non-homogeneous token. Different from the homogeneous form of Bitcoin, the characteristics of NFT are unique. It is a unique and easy-to-verify digital asset that can represent GIFs, pictures, Assets such as videos, music albums, etc. In fact, everyone may have known about NFT a long time ago. For example, the popular game in 2017, Cryptokitties, was so popular that the Ethereum network was paralyzed. The price of an NFT cat was as high as 600ETH. And the recent popular NBA Top Shot is a good case.
The properties of NFT make each NFT unique and authentic, which solves a big problem in the art and luxury industry. For example, LV is preparing to launch NFT to prove the authenticity of its luxury goods, or track the life cycle journey of individual handbags.
Another feature is that ownership belongs to the user. For example, in traditional games, players don't really own anything in the virtual world. But in blockchain games, the assets in the game are owned by the players. Even if the game is down or the server is closed, the players still hold NFT assets, and they can also be converted into tokens for use in other games.
In theory, anything that exists online can be purchased as an NFT. NFT is "an encrypted token". Ryan Duffy, author of Emerging Tech Brew, explained that the biggest difference between NFTs and cryptocurrencies is that NFTs are non-homogeneous, they are not interchangeable, nor can they be divided. Think of Pokemon cards, although each card can be traded, they are inherently different, and in comparison, one bitcoin is essentially the same as another and is interchangeable.
One of the reasons for buying NFT is its sentimental value. In this regard, NFT is not much different from real objects, unless the buyer is a complete utilitarian and only cares about the material value of the product. In real life, no one buys lip gloss out of pure need, and everyone buys it largely because of the happy feeling that lip gloss brings them. The same goes for GIFs, pictures, videos or other digital assets. Another important reason to buy NFT is that it has room for appreciation, and you can make more money by buying and reselling NFT.
This process varies depending on the platform used. There are currently many NFT trading markets on the market, such as OpenSea, KnownOrigin, Rarible and so on. For example, on Top Shot, you need to sign up to join a waiting list, which may already have thousands of NBA fans. When a digital asset is released, you will be randomly selected to buy it. While Top Shot accepts both U.S. dollars and cryptocurrencies, some platforms only accept cryptocurrencies, such as OpenSea.
In general, there are four common methods, namely:
Purchase potential NFT tokens on major trading platforms;
Buy and sell NFT assets;
Become an encrypted artist and issue your own NFT;
Pledge NFT liquidity mining.
Buying tokens of the NFT concept and buying NFT are actually two different things. If you want to simply invest in the NFT track, you can buy top NFT tokens such as ENJIN, MANA, SAND, etc. on major exchanges.
If you want to participate in the NFT collectible market, or buy and sell NFT to earn the difference, general NFT markets like OpenSea provide channels to buy various NFT assets. In addition, there are NFT platforms dedicated to crypto art, such as SuperRare and Nifty Gateway. If you want to know more about how to use the platform, you can add researcher Sophia (ID: lovebit98) to ask.
There are many NFT projects combined with liquidity mining, such as Aavegotchi. Users can mortgage Aave's tokens to obtain NFT tokens of the ghost image. The collateral behind this NFT token is an interest-bearing token. On Aavegotchi, users can obtain a little ghost image by staking atoken (equity token on Aave), and each little ghost is an NFT token. The special thing about Aavegotchi is that the collateral atoken behind the little ghost is an interest-bearing token, and the value of the collateral will increase over time.
The ownership of the NFT is recorded on the blockchain, which is decentralized and exists in encrypted form on many people's computers. In order to avoid buying fakes, you must check the source of the NFT when purchasing it. Taking OpenSea as an example, check whether the NFT you intend to purchase comes from the official store opened by the project on the platform. Generally, popular projects will be officially certified by OpenSea. Secondly, you can also use social media to find out which project or artist the NFT you want to buy comes from. Project parties and artists usually choose to promote it on social media, and everyone can purchase it from the link they share.
NFTs have exploded recently, but they are not new. According to Andrew Steinwold, the origin of NFT can be traced back to the Colored Coins supported by the blockchain in 2012. The CryptoKitties craze appeared in 2017, which attracted people to rush to buy encrypted cats, and NFT really became mainstream.
"Everything can be NFT."
The application range of NFT is also very large. We know that most assets in the real world are non-homogeneous assets, and if these assets are to be chained, or to find the corresponding digital form, then NFT will be the most suitable standard, so we firmly believe that this is the blockchain in The second largest application scenario outside of finance.
NFT can be applied to digital artworks, collectibles, in-game items, virtual worlds, sports competitions, fashion entertainment, identity verification, insurance, infrastructure such as domain names, digitization of physical assets, electronic tickets or coupons and other application scenarios. Games and digital art can be said to be the two main application scenarios of NFT.
NFT based on blockchain technology can record the status and achievements of players in the game. In-game items such as weapons, equipment, characters, etc. can all become NFT. NFT can ensure the ownership verification and authenticity of game items. CryptoKitties, Axie Infinity, and Aavegotchi are all gaming use cases for NFTs.
Digital art is another mainstream application of NFT. Each piece of art can be presented in the form of NFT, artists can ensure their own copyright to the work, buyers can verify the authenticity of the purchased artwork, and no intermediaries are needed, and encrypted artists can earn more income. SuperRare, OpenSea, and MakersPlace among others are crypto art use cases for NFTs.
Take NBA TOP Shot, for example. NBA TOP Shot is a very popular NFT card game recently, with a rate of return as high as hundreds of times.
The reason why NBA TOP Shot is so popular can be divided into three parts.
(1) One is the aggregation of sports fan effect + digital collectibles. The cards mainly feature the iconic actions of NBA star players, which has a very sticky audience, so it is natural for such digital version of star cards to become popular. . Since these star cards are sold in limited quantities, teams with more fans and more popularity such as the Lakers, as well as popular stars such as James and Curry, generally have higher prices for the wonderful moment cards.
(2) The second is the endorsement of trust from Dapper labs, the same team as CryptoKitties.
(3) The third is the promotion of fomo emotions. In fact, this is the commonality of digital collectibles-the earlier you enter the market, the more profitable you can be. For example, the transaction price of a star card with a cost price of only US$230 may reach around US$100,000.
Flow, also developed by Dapper labs, is also very popular recently. It is a public chain specially created for the entertainment and cultural industry.
This kind of collectible project is currently an NFT investment direction, and general projects will use the scarcity of NFT + fan effect to attract audiences.
NFT artwork trading platforms include SuperRare, MakersPlace, and Known origin. Each piece of artwork can be presented in the form of NFT, artists can ensure their own copyright to the work, buyers can verify the authenticity of the purchased artwork, and no middlemen are needed, and encrypted artists can earn more income.
For friends who want to buy NFT artworks but don’t know which platform to buy on, you can click on this article. This link provides a detailed analysis of the six popular NFT trading platforms, such as the categories of collectibles traded on the platform, and the various platforms of each platform. Comparison of features and commissions.
OpenSea is currently the world's largest NFT trading platform, established in January 2018. It covers a wide range of NFT categories, integrates NFTs from various platforms, and sells them at a more favorable price. It is currently the most used trading platform by mainstream NFT players. In terms of transaction volume, OpenSea ranks first.
Rarible was founded in 2020 and released the governance token RARI on July 15, allowing the most active creators and collectors on Rarible to vote for any platform upgrade and participate in management and review. At present, there are 6932 collectors on the platform, which can be regarded as a mainstream trading platform. In terms of the number of traders, Rarible maintains its leading position.
SuperRare specializes in trading those ultra-rare works of art. This is an NFT marketplace for trading unique digital artwork. The platform is characterized by advanced management, simple experience, flexible payment methods, social profile and mobile APP, which can conduct real-time auctions.
Different blockchains have their own NFT standards. On Ethereum, common NFT standards include ERC 721, ERC 1155, and ERC 998 protocols. On the WAX blockchain, SimpleAssets and AtomicAssets protocols are common. Among them, the most common standard for non-fungible tokens is ERC 721. CryptoKitties, founded in 2017, was once the first star project of NFT. What many people don't know is that the ERC 721 standard is exactly what the project CTO Dieter Shirley proposed. Created and published, it can be said that Dieter Shirley is one of the founders of NFT.
Many NFT projects have launched their own native tokens. For example, MANA is the token of Decentraland, and Flow is the token of the NFT public chain platform launched by Dapper Labs.
In addition to holding coins to rise, some NFT tokens can also be used to purchase land, goods and services in the virtual world, and to pay platform fees. Digital collectible exchange platform Rarible’s RARI token can be used for governance, management and voting on featured artwork.
In the previous round of slump, Bitcoin fell from $58,000 to below $45,000, and most tokens were affected, such as sushi, uni, and link. Several of the coins with the smallest decline and the fastest rebound in this round of sharp drop are all coins with the NFT concept. To give a few examples, since Sophia bought MANA for 50 cents last year, it has increased by more than 10 times.
Some NFT creation platforms aim to make it easy for anyone to create NFTs, regardless of whether they have the development skills to deploy smart contracts. NFT trading markets usually also provide tools or tutorials to guide users to create their own NFTs. For example, trading platforms such as OpenSea and MintBase also provide their own creation tools.
For example, tools made by the Mintabse and Mintable platforms allow ordinary people to easily create their own NFTs. Mintbase creates NFT based on ERC721. The gas fee required to mint NFT on different platforms ranges from $2 to $32.
The OpenSea platform also supports NFT creation, and it is completely free, and users do not need to pay fees to deploy smart contracts. Click "Create" in the upper right corner of the website to start creating.
Now, OpenSea has released an NFT maker that does not require gas fees. When creating and selling NFTs, there is no need to pay any gas fees.
(1) The first is the quality of the project and the reliability of the project party. Because the threshold for NFT issuance is extremely low and it is easy to be imitated and plagiarized, attention to the influence of the issuance team will affect the judgment of the potential of subsequent transactions.
(2) The activity level of the community. NFT is more dependent on market activity than DeFi, so sneaking into the community and observing the discussion in the community is one of the evaluations that indirectly measure whether NFT issuance and trading are likely to be profitable. And it is not enough to simply compare the number of people in the community. The number of people in the community is easy to falsify. We should pay attention to the popularity of discussions in the community.
(3) Market transaction records. These historical transaction data can be found on the Nonfungible website, after all, these data are publicly visible. It is worth noting that the evaluation of NFT projects is not based on the assets for sale on the platform, because the scarcity and uniqueness of NFT determines that the market's evaluation criteria for each asset are constantly changing.
(4) Different from homogeneous tokens, NFT also has aesthetic judgment requirements. There are many crude NFT artworks on the Internet that need to be screened by yourself.
(5) The scarcity of NFT itself. For example, the total amount of CryptoPunk is fixed at 10,000. Unlike CryptoKitties which can be spawned indefinitely. As the NFT industry continues to expand, the scarcity of CryptoPunks themselves will make them even more valuable. In the last quarter of 2020 and the first two months of 2021, sales around CryptoPunk have reached tens of millions of dollars.
Non-homogeneous tokens have quietly become popular in 2020, and as people begin to see the potential value and utility of NFT, there will be a lot of room for growth in the NFT market in 2021. Nearly 30,000 respondents believe that NFT is the next hot topic after DeFi, and the combination with DeFi will lead to a new wave of NFT. In general, NFT has broad prospects. Interest in NFTs has exploded, as Google search trends show.