A historical video of a basketball match, a digital painting made with artificial intelligence or a vintage tweet, all goods that say nothing but that can be certified with an NFT that can be sold at stratospheric figures.
It is spoken very often in recent times of NFT, acronym for Non fungible token, literally non-replicable token. But what are they and what are they for and how to invest in them?
The first NFT begin to circulate in the field of digital art in 2014, but the real turning point comes in 2017 when a group of Canadian developers launches “Cryptokitties” a game that allows you to buy a digital kittenraise it and make it mate to generate new cats all unique, certified by one smart contract of the block chain Ethereum and exchangeable with other users.
The game was so successful that it compromised the stability of the entire system Ethereumunconfirmed rumors report that during the release year and 2018, kitten transactions took up more than 10% of the entire Ethereum network. The game then fell into oblivion but the popularity of NFTs was only at the beginning so that in 2021 the NFT market generated transactions for 26.9 billion dollars in cryptocurrency as it claims. a report by Chainalysis, a company specializing in blockchain analysis and crypto assets.
NFT: what they are and where they apply
Literally non-reproducible tokens, based on a blockchain which guarantees absolute authenticity at the time of purchase of an NFT, considered a unique digital object completely traceable from the moment of its creation, a “Non-fungible token” is a certificate of ownership of the token that can only be put up for sale. author of the NFT since the right of ownership always remains with the creator and not with the buyer.
It comes in substance of “ownership” certificates on digital works. In detail, it is a special type of cryptographic token that represents the deed of ownership and the certificate of authenticity written on the Blockchain of a unique asset (digital or physical). NFTs are not mutually interchangeable and differ from cryptocurrencies, such as bitcoins for example, which are fungible.
NFTs are used in particular applications that require unique digital objects such as crypto art, digital collectibles and online games. In particular, the art world is one of the first fields of use of NFT, due to its ability to provide proof of authenticity and ownership of digital art that would otherwise have had to deal with the potential of mass reproduction and unauthorized distribution. on the Web.
How do they work
As Agendadigitale.ue reports, “whoever buys a work linked to a non-fungible token he does not buy the work itselfbut simply the possibility of demonstrating a right to the work, guaranteed through a smart contract. It all starts with a digital version of the artwork. Typically, a digital photo or documentation of it filmed and saved in digital format is used. This digital version is nothing more than a long sequence of numbers, 0 and 1 in computer language ”.
This sequence is then “compressed” into a sequence, called hash, derived from it but much shorter, with a non-invertible process known as hashing. It is important to underline that whoever owns the digital document can easily calculate the hash, while it is practically impossible for anyone else to reconstruct a digital document starting from a hash. The next step is storing this hash on a blockchain, with an associated time stamp. The use of these tokens has paved the way for an automated hash market, where the creator of the hash can use the token to add their own hash to it and then sell it in exchange for a cryptocurrency payment, such as the ETH coin used in Ethereum.
The NFT keeps track of hash sales internally, so that it is possible to trace the hash’s hand over to its creator, thus demonstrating ownership. This mechanism therefore provides a proof of authenticity and, at the same time, of ownership of the work.
How to invest in NFTs
To purchase NFTs you need a blockchain, almost always that of Ethereum. But lately alternative solutions such as Flow Blockchain, Binance Smart Chain, Solana, Cardano, Polygon, TRON and EOS are coming. The platforms for trading NFTs are numerous, from Open Sea to Nifty Gateway, from Valuables (for buying tweets) to CryptoKitties. There are Rarible and SuperRare specializing in artwork or Valuables for purchasing tweets.
Transactions take place in almost all cases in cryptocurrency, so it is necessary to have a digital wallet (wallet) such as Metamask.