You should know these things about NFT

I believe that all of you who are engaged in the blockchain field, or investors who are widely involved in it, have more or less experienced the impact of some transactions under the name of NFT on our senses in the recent past.

You should know these things about NFT

This latest craze in the crypto space is changing the way we buy and sell goods in the digital space.

Some blind boxes of cartoon cats, a video of LeBron dunking from high altitude, and a digital painting with a resolution of only 5000 pixels will soon be sold at Christie’s auction house.

All of these are irreplaceable tokens, or NFTs. This is an emerging digital artwork and method used in other media products.

These encrypted assets represent the latest area based on the blockchain boom: the value of the entire NFT market did not exceed $42 million three years ago.

According to the latest estimates by Nonfungible.com, which monitors the NFT market, the market value of NFT has increased by 705% by the end of 2020, reaching USD 338 million.

Although there is no estimate of the current market size, there must be greater growth. As of the end of February this year, NFT’s sales were close to 310 million U.S. dollars, almost five times the full-year sales of 2020.

NFT application ecology

Why is NFT getting so much attention now, and what basic concepts should we understand about NFT?

Basic concepts of NFT

The full name of NFT in English is Non-Fungible Token, which is translated into Chinese as: non-fungible token, which is indivisible, irreplaceable, and unique.

On the blockchain, digital cryptocurrencies are divided into two categories: native coins and tokens. The former, such as BTC, ETH, etc., have their own main chain and use transactions on the chain to maintain ledger data; tokens are attached to the existing blockchain and use smart contracts to record the ledger, such as attached to Ethereum Token released from above. Tokens can be divided into two types: homogenization and non-homogeneity.

Homogeneous tokens, namely FT (Fungible Token), can replace each other and can be close to infinitely split tokens. For example, there is essentially no difference between a BTC in your hand and a BTC in my hand. This is homogenization and homogenization of coins.

The non-homogeneous token NFT is a unique blockchain project with blockchain management rights. For example, collections, game items, digital art, event tickets, domain names, and even ownership records of physical assets.

Therefore, compared with FT, the key innovation of NFT is to provide a way to mark the ownership of native digital assets (that is, assets that exist in the digital world or originate in the digital world), and this ownership can exist in centralized services Or outside the centralized library.

The ownership of the NFT does not prevent others from inspecting it or reading it. NFT does not capture the information and then hide it, it just captures the information and discovers the relationship and value of the information with all other information on the chain.

At the same time, due to its non-homogeneous and inseparable characteristics, NFT can anchor the concept of commodities in the real world. Simply understood, it is a digital asset issued on the blockchain. This asset can be a game item. , Digital artwork, tickets, etc., and are unique and non-replicable. Because NFT has natural collection properties and is easy to trade, crypto artists can use NFT to create unique digital artworks.

Non-homogeneous token standard

The standard is the part that makes non-homogeneous assets stronger. They assure developers that the asset will behave in a specific way and accurately describe the way it interacts with the asset’s basic functions.

ERC721

ERC721 proposed by CryptoKitties is the first standard that represents non-homogeneous digital assets. ERC721 is an inheritable smart contract standard, which means that developers can easily import it to create a new OpenZeppelin library consistent with ERC721-contract (we created the first useful tutorial of ERC721 contract here). ERC721 is actually quite simple: it provides a mapping from a unique identifier (each identifier represents an asset) to an address to represent the owner of the identifier. ERC721 also provides a licensing method for asset transfer using the transferFrom method.

If you think about it, these two methods actually represent all that NFT needs: one is to check who owns what, and the other is to send what. The standard has some other features (some features are very important to the NFT market), and the core part of ERC721 is very basic.

ERC1155

ERC1155, pioneered by Enjin’s team, proposed a semi-homogeneous solution for the NFT world. In ERC1155, ID does not indicate an asset, but the category of the asset. For example, an ID may represent a “sword”, and a wallet may have 1,000 such swords. In this example, the balanceOf method will return the number of swords owned by the wallet, and the user can transfer any number of these swords by calling the “sword ID” through transferFrom.

Analysis of ERC20, ERC721, ERC1155 standards. ERC20 maps addresses to amounts, ERC721 maps unique IDs to owners, and ERC1155 has nested mappings that map IDs to owners and amounts.

Non-Ethereum Standard

Although Ethereum is currently home to most businesses, several other NFT standards have emerged in other business chains. DGoods is the pioneer of the mythical game team. It has been committed to providing feature-rich cross-chain standards since EOS. The Cosmos project is also developing the NFT module, which is available as part of the Cosmos SDK.

Specific application scenarios of NFT

There are many application scenarios of NTF. Games, ticketing, etc. are all its application scopes. The specific application scenarios are as follows:

game. For example, it can be used as pets, weapon props, clothing and other items in the game. The smash hit crypto cat in 2018 uses NFT technology. They give each cat a special tag number to make it a unique cat.

The field of intellectual property.

NFT can represent a painting, a song, a patent, a film, a photo, or other intellectual property rights. In this area, NFT plays the role of a patent office. Help each unique thing to register the copyright and help it identify the patent.

Physical assets. Real estate such as houses and other physical assets can be tokenized by NFT. It can be used in financial markets such as the circulation of assets.

Records and identification. NFT can also be used to verify identity and birth certificates, driver’s licenses, academic certificates and other aspects. These can be safely stored in digital form to prevent abuse or tampering.

Financial documents. Invoices, orders, insurance, bills, etc., can be converted into NFTs for trading.

Ticketing. Concert tickets, movie tickets, drama tickets, etc., can all be marked with NFT. All tickets are the same, but the seat numbers are different.

Simple way to participate in NFT

Ethereum already has many conventional NFT platforms like OpenSea and Rarible. These markets aggregate NFTs in the ecosystem. Users can easily purchase various NFTs through a single display page.

In addition, there are some platforms dedicated to certain NFTs, such as SuperRare and Nifty Gateway, which mainly sell NFTs that combine art and cryptocurrency.

Of course, you can use these two platforms, but before making any decisions, you need to set aside some ETH to buy or participate in NFT bidding.

Platforms like OpenSea support multiple token settlements, but are mainly settled in ETH. Therefore, you also need a browser wallet like MetaMask, so that you can directly interact with the smart contract of the NFT platform.

There are many types of NFT projects on the Ethereum chain. Nowadays, BSC and HECO, which are competing chains, also have more eye-catching performance:

The layout of the NFT project party on Binance Smart Chain BSC: Arkane Network in infrastructure and CurveGrid, a blockchain application service.

Chiliz, a blockchain-based e-sports voting platform, and Realy, a trendy item NFT authentication trading platform based on the Binance smart chain.

DeFi and NFT integration projects include: Ethereum-based batch auction tools Bounce.Finance, Dego, digital art charity donation platforms initiated by Binance Charity and Binance Smart Chain, NFT For Good, and Thugs.Fi.

Collectibles: Alpaca.City, Bondly.Finance, Juggernaut JGN; games: BambooSwap, Battle Pets, Blink, RocketGame; and BakerySwap, BCA, Lotex, Pancakeswap and many other partners.

There are also many NFT projects on the Huobi Eco-Chain HECO, such as the NFT HERO of the collectible category DeFi+NFT, the game category SOVI, ATTN, GameDAO, Island Economics (IEC), and the infrastructure category BeeSwap.

 

Does NFT have investment value?

Whether it’s art, Mouton Rothschild or CryptoKitty in 1982, investing in alternative markets is more risky and less rewarding than investing in more mainstream markets such as stocks.

A recent Citibank study found that from 1985 to 2018, the annualized rate of return of the contemporary art market was only 7.5%. At the same time, the return rate of the stock market is close to 10%. Although the price of NFT is soaring, there is a bubble.

The NFT market is largely speculative and it is likely to experience the dramatic price fluctuations experienced by cryptocurrencies in the past few years. For example, the price of Bitcoin today is about $50,000. Twelve months ago, it was worth less than one-fifth.

“The risk is great,” said Nadya Ivanova, an NFTS researcher at LAtelier, a subsidiary of the investment bank BNP Paribas. “The important thing to understand about the NFT market is that it is very new. The market is still going through different market cycles that determine the true value of things.”

We believe that the current NFT is still a niche market centered on art collections and games, and the entire NFT ecological daily transaction volume is less than 2% of UniSwap. Since the development of NFT in 2017, the application has been gradually enriched, and the ecological diversity has increased. However, there are still problems such as low user activity and low liquidity. The current market enthusiasm for NFTs only remains on the concept of NFTs, and its essence is still the pursuit of high returns, rather than the NFT project itself.

Therefore, for ordinary investors, NFT may not be a very good investment target, but as an emerging concept, NFT still has a certain investment value.

©Spark Global Limited Financial information & The content of the website comes from the Internet, and any infringement links will be deleted.