NFTs are one of the most exciting new features on the Ethereum blockchain. NFTs act as digital representations of real-world assets that can be owned, traded or used within games and will open up a world of possibilities for developers to create unique experiences.
NFTs are non-fungible tokens represented by ERC721 tokens which were introduced in 2017 with the release of CryptoKitties, an online game where players breed, buy and sell virtual cats using Ether (ETH), an Ethereum cryptocurrency. This was the first ever NFT and made it possible to trade virtual items on the blockchain.
NFTs are unique and scarce tokens that can be used in a variety of ways:
- As collectibles, such as through CryptoKitties and other similar games.
- To represent ownership over digital or physical assets, such as artwork, property and company shares.
- To manage identity online, allowing users to own their online persona by registering important information on the blockchain. This is great for artists who want to protect their work from theft or for academics whose research needs to remain unbiased.
NFTs aim to make non-digital assets accessible via smart contracts which can be leveraged by developers in many new ways:
- Digital art can be created and sold via a transparent blockchain.
- In-game items from video games can now be tokenized and traded on the blockchain, opening the door for new kinds of player to player markets.
- Ownership can become truly digital as it is recorded on the blockchain with all its changes in ownership transparently logged. This will allow for things like real estate to be traded as tokens representing their value instead of having to sell them as physical assets.
As NFTs are not fungible, they have a unique identifier that is stored by every owner on the blockchain rather than being replaced when ownership changes. A good example of this would be if person A were to purchase a house and person B were to purchase the house next door, even if person A were to sell or lose their ownership of that house they would retain its identifier forever.
How to buy NFTs?
It is possible to purchase NFTs on the Ethereum blockchain using your ETH. The process is pretty simple and straightforward. You will need to use a wallet that is capable of trading tokens, which you can find here:
Once you have your wallet set up, you can buy some ETH (Ether coin). These instructions will walk you through buying ETH:
- Step 1: Navigate to ‘Buy’ section and select “ETH” or “Ethereum”.
- Step 2: Add the amount of ETH you would like to purchase and fill out the form.
- Step 3: Click submit and wait for confirmation. Once confirmed, click “Send Funds” and then follow instructions that pops up to complete the transaction.
Once you have your ETH, it’s time to buy some Non-Fungible Tokens!
- Step 1: Find “Token Contract Address” for a particular NFT you would like to purchase and click “Buy”. For information on how to find this contact address, check out this article
- Step 2: Fill in the form with the details of your transaction and send off ETH from your wallet. If everything is correct, the transaction will go through and you can begin trading! Note that transactions take a short time to go through as the Ethereum network makes sure all transactions are valid before processing them.
What is an ERC20 token?
An ERC20 token refers to any ERC20-compliant token. These tokens are issued on the Ethereum blockchain and adhere to a set of rules that detail how they should behave, ensuring compatibility with third-party services such as wallets. While all ERC 20 tokens work in much the same way, there are slight differences depending on the goals behind them which result in their uniqueness.
Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third party interference. These apps run on a custom built blockchain, an enormously powerful shared global infrastructure that can move value around and represent the ownership of property.
This enables developers to create markets, store registries of debts or promises, move funds in accordance with instructions given long in the past (like a will or a futures contract) and many other things that have not been invented yet, all without a middleman or counterparty risk.
Things to consider before you buy NFTs
Before you buy any NFTs, it is important to remember that they are not fungible. This means that each token will have a unique identifier and this identifier will stay with the token, even if ownership changes. Therefore, it’s important to understand what you plan on using the tokens for before purchasing any to ensure that your needs are met.
Non-Fungible Token (NFT) is a new way to hold or tokenize your assets. NFTs are a unique type of cryptocurrency, built on the Ethereum blockchain as an ERC 721 token. This means each token holds information about one item, whether it’s a house, gold bullion, artwork or something else entirely. NFTs can be anything from physical items to collectibles and even experiences such as tickets for a sporting event.
How do I use NFTs?
NFTs can be used in a number of different ways. While they are often discussed in the context of video games and collectibles, NFTs have applications far beyond this. For example, it is not too difficult to imagine a future where you can transfer ownership of your collectible items when playing a game so that someone else could use them for a period without you being able to access them. Similarly, physical items such as houses or cars could be put on the blockchain and then sold, transferred or rented out without going through a third party broker. As NFTs work on the Ethereum blockchain, any decentralized application (dApp) built upon Ethereum will also be compatible with these tokens.