Interested in owning unique digital assets? In this topic, let us learn how does NFT work.
How Does NFT Work?
NFT is the abbreviation for Non-Fungible Token. It is built on top of the Ethereum blockchain. NFTs are based on ERC721, a standard proposed by Fabian Vogelstellar. It is a smart-contract-based token standard that allows for each token to be unique or “fungible.”
This means that every token can be easily traded and exchanged for another one of the same kind. Unlike regular tokens which are all identical, NFTs can all have unique properties. This is like serial numbers and digital identities and can be traded freely between digital wallets.
Crypto Asset Trading
NFTs are a new type of crypto asset based on the Ethereum blockchain. They are the digital equivalent of collectibles, such as trading cards or rare artwork, but in digital form. Each NFT has its own set of characteristics, or traits, which give it specific properties and value.
Many NFTs represent ownership over an underlying physical asset and can be traded with other users for real goods or services. As long as the token is tradable, it maintains its value and can readily be exchanged for goods or other tokens.
NFT on Crypto-Games
Some game developers are creating standalone games and are selling NFTs for these games. These NFTs can then be traded between different players. In this case, these tokens represent digital assets that can be used as part of the game.
They could represent a sword, a virtual pet, an enchanted ring. Also, anything else that makes sense in the particular game being played. CryptoKitties, for example, is a game where you can collect and breed digital cats using Ethereum-based smart contracts.
Each cat is represented by its unique token that has been created using smart contracts on the Ethereum blockchain. Players of this game buy, sell, and breed different types of virtual kittens that have unique traits or characteristics called “cattributes.”
NFT Marketplace
Digital assets are a new type of online marketplace that allows users to buy, sell, or even exchange digital assets. The main feature of NFTs and digital assets is that they can be traded or exchanged for other tokens on a peer-to-peer basis. This means that anyone can trade their collectible digital art with someone else, who may in turn trade it with someone else, and so on.
The NFT ecosystem is built entirely on the Ethereum blockchain and its ERC721 standard. So, the majority of NFTs are intrinsically tied to a physical item that has real value. It can be traded for other tangible goods or services.
The value is up to the creator of the NFT to determine how many tokens will be generated. Also, how they can be used, and if they can be traded with other users. Hence, many developers are creating virtual reality games that allow users to trade and interact with each other in a digital environment.
Other developers are creating standalone digital collectibles like starter pets, or trading cards. So, this can be traded and sold throughout the NFT ecosystem.
