Decentralized platforms and blockchain technology are evolving at a fast rate, NFTs are one of the many fast-paced changes in the industry.
Non-fungible tokens (NFTs) also known as nifty are crypto tokens with properties that make it impossible to interchange similar tokens with it. Simply put, a Non Fungible Token is a unique asset, a digital version of a real-world asset. For example, Bitcoin is a fungible token, if you send bitcoin to someone, the person can send bitcoin back to you, and it’s still the same bitcoin. But with Non Fungible Tokens you can create digital scarcity and offer a level of uniqueness to cryptocurrencies.
Due to their uniqueness, they are mostly used as crypto-collectible for arts and gaming such as ERC-721. Examples of Non-fungible tokens are CryptoKitties collectibles. They were one of the first NFTs, on crypto kitties, each blockchain cat was unique in that if you sent someone a Kitty, it’d be different from the one you’d receive in return. CrytoKitties used the Ethereum ERC-721 tokens, leveraging the Ethereum blockchain technology and protocol.
Differences between Fungible and Non-fungible Tokens
Fungible tokens are divisible while non-fungible tokens are not. For example, bitcoin can be divided into smaller parts and units but a non-fungible token is not divisible.
There are not two identical non-fungible tokens, unlike fungible tokens, if you’re sent a non-fungible token, you can’t send back the same token.
The unique information of an NFT is stored on its smart contract and isn’t changeable on the token’s blockchain.
Why NFTs are profitable in recent times
NFTs have become very profitable for the following reasons:
Provides Value for Tokenized Assets: NFTs provides an opportunity for real-life objects to be tokenized, thereby removing the duplication of such work and reducing the ownership to the artist, this then creates scarcity for the work and thereby increase the value for the work.
Gives Investors more Liquidity options: By creating tokenized assets, investors have more liquidity over their assets. To explain better, when a virtual owner rents out a property, they still retain the ownership of the land even after its hired for a fee.
Has a Potential for Growth: NFTs have been proven to show a potential for growth especially in the land sector.
Challenges of NFTs
Like everything with an advantage, NFTs face some challenges in the world of crypto, some of which are:
Too technical for non-tech people to venture into: From setting up wallets to managing private keys, it can be a very tedious process for anyone who’s not very tech-savvy.
Fear of Regulations and Securities: For NFT focused projects, implementing them can be very challenging, for example, a tokenized piece of art or house and can be subject to Government securities and regulation laws.
No visible difference between centralized and decentralized finance systems, there’s been a thin line between centralized and decentralized finance that is already blurred with no notable differences in some instances.
NFTs and Cartesi — The Probable future
Currently, NFTs are used mostly on gaming platforms and for digital arts on sites like SuperRare, However, NFTs are sure to have a higher potential in industries such as copyright and ticket sales.
With NFTs an extra layer of security to the tokenization of assets and can be shared on a digital wallet for ease of access. Cartesi captures the essence of, and going beyond, Layer-2 scalability solutions. With Cartesi, blockchains get the superpower to achieve consensus over real-world computations happening off-chain and this could be a great advantage for NFTs.
Cartesi embraces the security and the economy of the blockchain while enabling real-world intensive and massive computational tasks. Cartesi brings real-world usability to the average user. Cartesi creates vast new opportunities for emerging systems like the NFTs. Developers will be able to use traditional tools and libraries that can be compiled for Linux.
Additionally, game state processing will be free from the computational limits and high fees of blockchains without the need to sacrifice decentralization. Hence, users can maintain the security of the blockchain on-chain while enjoying off-chain simplicity.
Cartesi’s Ecosystem Links:
Telegram Announcements: https://t.me/cartesiannouncements
Discord (Development Community): https://discordapp.com/invite/Pt2NrnS