When we talk about cryptocurrencies, we often hear many lingos that usually drive us away. Cryptocurrencies in nature are a bit complex from a technical aspect, but when explained in layman’s terms, they can make much more sense. Enter Non-Fungible Tokens, or NFTs for short….what are they, and how to use them? Read on.
What are NFTs – Definition
In order to be able to explain what Non-Fungible Tokens are, we need to break down the words that compose it:
NFTs are basically digital ownerships tokens, that run on blockchains that support smart-contracts, such as Ethereum. Their non-fungibility is similar to real-world contracts, where you can’t trade one contract to another, because the “actual content” differs from each other. Same things for NFTs, where you can interchange them as their underlying “contract” changes with each one, hence their non-fungible nature.
NFTs – Representations of the Future?
In today’s fast-moving cryptocurrency sphere, many concepts and applications are constantly evolving. Digital assets and their classifications are evolving right alongside cryptographic and blockchain technology. For Non-Fungible Tokens, real-world applications of smart-contracts lie ahead. With cryptocurrencies such as Bitcoin being used to transfer monetary value, NFTs are used to transfer digital ownership. That’s why you can’t divide NFTs the same way you would do with Bitcoins, like for example sending 0.5 Bitcoins, as sending half a contract or half an entrance ticket wouldn’t make much sense.
You might be asking, what’s the use of NFTs if those applications are already being used? Well, the keyword is “decentralized smart-contracts“. There’s something to that word that makes you feel….secure, no? Here is a list of real-life applications:
- Identity Management
- Artwork
- Real Estate
- Media and Entertainment
- Gaming
Some DeFi protocols took advantage of the NFT craze back in summer 2020, allowing users to farm NFT tokens. This resulted in massive price pumps during the summer, but so far haven’t exploded in popularity yet.
Where to BUY Non-Fungible Tokens?
Now that we understand what an NFT is, it is important to understand where can those digital assets be found. Since they are contracts and non-fungible, you wouldn’t just find them on regular cryptocurrency exchanges. You would go on specialized digital exchanges that are NFT marketplaces, and exchange them for cryptocurrencies. Here are a few NFT exchanges:
- OpenSea
- Consensys
- Rarible
- XENO
Don’t know any NFT? Here’s a list of the top 5 NFTs with their respective market caps:
- Flow: USD 463 million
- Enjin Coin: USD 455 million
- Decentraland: USD 442 million
- The Sandbox: USD 188 million
- WAX: USD 123 million
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Rudy Fares