A non-fungible token, also known by its acronym NFT, is a type of cryptographic token that represents a unique, unrepeatable asset limited in its quantity. These digital items are also known as “crypto-collectibles”, because they possess characteristics of scarcity and rarity that make them attractive for serial purchase and collection.
NFTs work on smart contract networks, such as Ethereum, which is currently the blockchain with the largest market for non-fungible tokens. There have also been versions of these assets in networks such as Bitcoin, which is the first blockchain where assets such as memes and playing cards were traded.
NFTs function as tokenized versions of other digital items or real-world objects. For example, they can be the representation of a physical work of art or a character from a video game. Because of this, many of these function as verifiable proof on the blockchain that an object is authentic and belongs to a user. Also, some of these tokens are one-of-a-kind pieces, allowing their collection.
NFTs today have become a fundamental part of the new blockchain-powered digital economy. Based on these tokens, gaming items, digital art, digital identity systems, certificates, licenses, event tickets, domain names and even property records of physical assets have been created. In other words, a whole new ecosystem where the digital object is indisputably a commercial and useful piece.
What does “non-expendable” mean?
To fully understand the nature of NFTs, it is key to understand the concept of fungibility. This word refers to units that can be replaced by identical elements. That is, it is an object or asset whose individual units are interchangeable and indistinguishable from each other.
For example, national currencies such as the dollar, the euro, or the Latin American pesos are fungible assets, since each of their units can be exchanged for other equivalents. If you have a $ 5 bill, it can be exchanged for another authentic $ 5 bill.
NFTs, on the other hand, as the name implies, are “non-expendable.” These assets differ from fiat currencies exactly by the principle of fungibility, as the most notable feature of NFTs is that they are unique, limited, and possibly collectible items. In other words, no NFT token is equivalent to another in exactly the same way, or at least not in theory.
When NFTs were created, the idea was to generate digital assets that had attributes similar to bitcoin but also had an identifier on each unit. In this way, each piece is different from one another and the address where they are hosted on their respective blockchain can be used as proof of ownership.
Origin and history:
The grandfather of the NFTs: The colored coins
The history of non-fungible tokens in blockchains dates back to the early years of the industry when the Bitcoin community was just taking its first steps to diversify. It was in 2012 when “colored coins” appeared, which is the first antecedent of the NFTs that we know today.
Although some experts argue that colored coins are the first non-fungible tokens to be traded on the Bitcoin blockchain, the reality is that their operation is far from what we know today as an NFT asset. They were new assets made from small denominations of a bitcoin, which could be as small as a single satoshi -which is the minimum unit of BTC-, which were used to represent a variety of digital elements and various assets.
For example, colored coins could be used to designate properties, coupons, issue company shares, generate subscriptions, or even trade digital collectibles. That is, they expanded the usefulness of Bitcoin and allowed for more experimentation among developers in the community.
However, the reality is that the Bitcoin network was not intended to work this way and ended up at a huge disadvantage. A BTC could represent another value only if all the participants agreed since otherwise, the system would collapse.
In this way, if a group of 5 participants agreed that 100 colored coins represented 100 stocks, they could trade with them. But, if one of these participants decided to circumvent the pact and stop considering this equivalence, then the same system could no longer be used. The colored coins had a weak consensus mechanism, so their useful life was limited.
Counterparty on Bitcoin: Spells of Genesis and Rare Pepes
The colored coins, although failed, showed the enormous potential that the issuance of digital unique objects had on blockchain networks. The curiosity bug stung a group of developers, consisting of Robert Dermody, Adam Krellenstein, and Evan Wagner, who built a financial platform called Counterparty.
Counterparty works connected to the Bitcoin network but as a separate protocol. In this way, the initiative was presented as a distributed, peer-to-peer system , which allowed the creation of new digital assets. And this is how trading card games and rare meme exchanges came to the Bitcoin network, it was also here that an increasingly varied market for NFTs began to form on the blockchain.
The Counterparty platform appeared on the market in 2014, and by 2015 the first game with cryptographic assets had been issued on a blockchain, under the name of Spells of Genesis. The project carried out an Initial Coin Offering (ICO) to finance its launch, as well as distributed among its investors a token called BitCrystal that was later used as a gaming currency.
It was with the introduction of Spells of Genesis that an increasingly eager community for non-fungible tokens began to form, with the first collectible cards on a blockchain and the most iconic Bitcoin exchange of memes arriving in 2016. It all started with Force of Will’s association with Counterparty, an alliance that allowed their cards to be launched on the platform.
The event was of great importance for the NFT market of Bitcoin since these trading cards in their physical form were in the fourth position of sales in the US market. Shortly after, towards the end of 2016, the collectible memes also appeared with the famous figure of “Rare Pepe” or also known in Spanish as “Rare Pepe.”
Pepe is a frog character who has taken over the Internet and has captured a loyal group of fans. These began to emit these memes as assets from Counterparty, and the more rare the image of “Pepe” was, the more valuable the meme became. The activity was so successful that today there is a directory where all the frog memes that are registered in the blockchain are classified, and there are even experts who certify the rarity of said assets over others.
The Pepe Raro meme was the first to cross the bridge from Bitcoin to Ethereum, which is today the platform with the largest NFT ecosystem. It was around that time, in early 2017, when non-fungible tokens began to be traded on the Ethereum market and interest in these assets began to grow outside the confines of Bitcoin.
Punks take Ethereum as NFT
Ethereum’s non-fungible token ecosystem was formed long before the ERC-721 standard, commonly used to create NFTs, was created. This was due to the ingenuity of the developers, John Watkinson and Matt Hall, who realized that they could create unique characters on Ethereum and distribute them.
This is how the Cryptopunks were born, a series of 10,000 different characters who were inspired by the 1990 “cypherpunk” group that laid the foundations for Bitcoin and a more private Internet. Hall and Watkinson decided to release the Cryptopunks for the community in June 2017, allowing anyone to claim them.
Very soon a secondary market was formed for the sale of crypto punks, thus paving the way for the introduction of more specialized non-fungible tokens. By October 2017, the arrival of a single standard for NFTs was a reality, thus appearing the product that would revolutionize the entire market: Cryptokitties.
The Cryptokitties craze and the collectibles craze
Cryptokitties is, hands down, one of the most successful blockchain non-fungible token projects of all time. The idea for this game was simple but revolutionary: it allowed Ethereum regulars to adopt, breed, procreate, and trade adorable virtual cats.
Pink, with wings, fangs, dots or glitter. The virtual cats were cute and interactive. In addition, they could be collected because each one was unique and unrepeatable. Axion Zen, the company in charge of its development and today known as Dapper Labs, had created a new standard (ERC-721) that made it possible for an asset to be one of a kind and traceable ownership.
The concept was unveiled in October 2017 at the ETH Waterloo Hackathon, one of Ethereum’s biggest events. The game won first place, and before long, it had become a viral phenomenon. The Cryptokitties coincided with the bull market of 2017, which gave them greater notoriety, as well as they appeared in the news for their exorbitant sales and even congest the Ethereum network.
Unleashed the craze for crypto cats, NFTs became mainstream. Hundreds of games appeared replicating CryptoKitties, as was the case with robots and heroes. Likewise, environments such as Kitty Race and Kitty Hat were developed that added interactive functions to the cat community, allowing them to compete with each other or customize their accessories.
More speculative games also appeared, as was the case with Cryptocelebrities, which was a platform with a “hot potato” type of market mechanics. That is, users could buy a collectible at a relatively low price, and then it could be bought or “snatched” by another user for a much higher price. In this way, users generated quick money with the non-fungible tokens they bought.
The Cryptocelebrities system had its welcome back then, especially with controversial characters like Donald Trump, who sold for a price greater than $ 130,000 to date. However, this type of game only showed that the market was turning into a speculation bubble and that hardly people were understanding what the NFT tokens were really about, and what their multiple uses could be.
Diversification of NFTs on Ethereum: Digital Art, Virtual Worlds, and ERC-1155
When in 2018 the fever for cryptocurrencies began to decline, also the operations in NFT games decreased progressively. However, interest did not wane. The reality was that, with the introduction of a standard for non-expendable digital elements, a diverse number of initiatives decided to enter this market and launch their own proposals.
It was in this period that digital art platforms proliferated. The plastic arts are one of the communities that are most compatible with the concept of NFTs since a work – be it a painting, a mural, or a sculpture – also bases its value on rarity, property, usefulness, and the origin of a work.
Artists have used NFT tokens either to certify the authenticity and belonging of a piece or to generate the piece from scratch. In this way, initiatives such as SuperRare, Know Origin, Makers Place, and Rare Arts Labs became the ideal markets for the sale of non-fungible tokens as works of art.
It was also in the period between 2018-2019 when the term NFT was popularized to designate this type of asset. With the launch of the NonFungible.com platform, the term “non-fungible” was consolidated to describe this new class of digital elements that were found and traded on blockchain networks.
Companies like Axie Infinity and the Neon District also doubled their communities due to the growing interest in NFTs. And open markets, such as OpenSea, consolidated as an ecosystem to sell all kinds of non-fungible tokens that were issued on the Ethereum blockchain.
Likewise, NFTs have continued to penetrate the games industry, with developers in Japan leading this market. For example, MyCryptoHeroes is one of the most popular games that combines blockchain attributes and an off-chain ecosystem. Users can use their heroes in the game, and then transfer them to Ethereum to sell on open markets.
Virtual worlds have also teamed up with non-fungible tokens with the sale of land and the incorporation of unique items, such as works of art. For example, Decentraland, a virtual city created on the blockchain, raised $ 10 million in parcel sales in its metaverse, being one of the largest NFT businesses for 2018.
Among the technological advances that were incorporated into this market in that period, it stands out that the Enjin team expanded the possibilities of non-fungible tokens by creating a new standard, known as ERC-1155. This makes it possible to transfer elements from one game to another in simpler ways, and is described by experts in the field as a more efficient version of the NFTs. Later, in a specific section for standards, we will delve into the characteristics of ERC-1155.
Also, by then, non-fungible token minting platforms appeared, such as Digital Chain, and the possibility of creating decentralized name services (ENS) on Ethereum with NFT was also added. A series of services that has expanded the use cases of the market.
If 2018 and 2019 was an especially prolific period for the diversification of NFT tokens, 2020 and 2021 is a season to taste the honeys of technological advances that have been made in this ecosystem. And it is that, while the Ethereum decentralized finance market (DeFi) has been consolidating and popularizing, the NFTs are also giving a lot to talk about.
For example, in 2020 a new type of NFT digital art was launched capable of being programmable and mutating in appearance. Known as volatile art, this technological advance was introduced by the art platform, AsyncArt. It allows a digital element to interact with data from the blockchain, or even information from oracles. The art gallery has sold two pieces that work with this new mechanism, a Bitcoin painting and a Vitalik Buterin painting, both for more than 200 ETH.
If these improvements in non-fungible tokens are not enough to illustrate the market rise, the data from NFT’s domestic market is interesting. According to Dapp Radar graphs, for the month of February 2021 more than 500 million dollars were traded in the purchase and sale of these assets. Likewise, these digital pieces are sold for increasingly higher prices due to the interest they arouse in collectors and investors, getting to buy an NFT meme of Homer Simpson Pepe in 320 thousand dollars and a cryptopunk of 7.5 million.
Furthermore, NFTs have reached unsuspected spheres in 2021. For example, one of the most elitist and longest-running auctions in the world, Christie’s, sold a work of art created through a non-fungible token. Also for this same date, a token of a work by Banksy , the popular and controversial English street artist, has been created after the original graffiti has been burned to turn it into a digital piece. Even Jack Dorsey himself, CEO of Twitter, has marketed his first tweet on the platform in non-expendable token format.
These market movements suggest that NFT tokens are becoming an increasingly important trend in the cryptocurrency ecosystem, capturing a diverse audience for their rarity and infinities of use cases. With the introduction into digital art and auction houses, it seems that NFTs are walking the path to their increasingly common use.
How does an NFT work on the blockchain?
The first thing to know to understand the general operation of a non-fungible token is that these assets are created and transferred within a blockchain network. However, unlike a native cryptocurrency or an ERC-20 token, these represent other digital elements that can be from the physical world, be stored in other applications, or be inherent to the blockchain in which they were created.
For example, an NFT can be a certificate of authenticity for a work of art that exists in the real world; they can be the tickets of a virtual event that will be given on another platform; or they can become the representation of game elements that interact with the blockchain protocol itself, as was the case with CryptoKitties for a long time.
The operation of these tokens, as well as the elements that interact with the NFTs, will depend on the use case of each token. For example, the metadata, which is all the additional information inherent to the token, can be stored within the NFT’s smart contract or at an address outside the network depending on how the asset has been developed.
Likewise, the operation will also depend on in which blockchain the NFT has been issued and under what type of smart contract standard. A series of common specifications shared by a similar group of digital products is known as a standard (in technology). For example, the Internet has standards for data communication such as HTTPS or IP. The standards give the guarantee that all products generated under the same code will behave in a specific way.
In the case of NFT tokens, there are various standards both for the Ethereum blockchain, and that are being developed for other smart contract networks. However, the most common standard is ERC-721, which determines that assets that have a unique identifier in the address where it is generated can be created, owned, and traded. In this way, they can be tracked, thus certifying the authenticity of the asset, its property, and its unique essence.
The NFT standards are reusable and inheritable, which has allowed the generalization and proliferation of non-fungible tokens on networks like Ethereum. Likewise, these technical specifications determine that the NFTs exist at an identifiable address and cannot be replicated, or transferred, without the permission of the owner of that address.
Anyone can create these digital assets since the standards are open source. Of course, you need knowledge on how to program on a blockchain and how to develop smart contracts. A task that is not simple, for which there are companies that are exclusively dedicated to minting this type of digital elements.
Non-fungible tokens can be stored in wallets, only if they have 3 Web browsers to interact with decentralized applications (DApps). They also have the ability that their ownership can be transferred to another user and the history of movements is recorded. That is, in this sense, they work exactly the same as an ERC-20 token or a native cryptocurrency, such as BTC or ETH.
Characteristics of NFTs on blockchain
With these elements in mind, it is remarkable that non-fungible tokens on the blockchain are a new alternative to represent, distribute and commercialize unique elements on the Internet.
It is due to features such as interoperability, programmability, and even standard development, that NFTs have become popular in markets such as digital art and video games. In this section, we will highlight each of the elements that differentiate non-fungible tokens from other assets and collectibles.
Standard representation: As mentioned above, NFTs have common, reusable, and inheritable specifications. Standards such as ERC-721 and ERC-1155 determine functions such as access control to the token, its transfer to other addresses, and the tracking of its property.
Interoperability: Thanks to their standard representation, non-fungible tokens have the ability to interact with the entire ecosystem without major problems. NFTs can be traded in different markets, viewed in wallets, and even used in virtual worlds. Applications only need to support ERC-721 to begin interacting with collectible assets.
Free trade: Although it is true that there is not such a wide market for the purchase and sale of NFT compared to other crypto assets, one of the advantages that these tokens offer is that they can be traded more easily than other digital elements. Because they are part of a decentralized economy and a growing digital market, there are sophisticated platforms that are willing to provide services for the sale of digital art or gaming tools.
Immutable and demonstrably scarce: Smart contracts governing NFTs allow developers to set supply limits on their tokens, as well as enforce properties that cannot be modified. For example, when creating an NFT it can be determined that there will only be 100 pieces of that element, a characteristic that cannot be modified because it is in its code. In this sense, just by auditing the contract code, users can be certain that the token they own is one of a kind or that it belongs to a limited series.
Programmable: Another remarkable feature of non-fungible tokens is that they are programmable. This means that developers can include more complex mechanics in the tokens, determining if they want them to be reproduced, randomly generated or modified under certain criteria. For example, as we have mentioned in CriptoNoticias, there are works of art with NFT that change shape depending on the price of Bitcoin or festive dates concerning the community.
Non-fungible token standards
To talk about how a non-fungible token works, it is necessary to delve into the standards developed to create said digital assets. As we have mentioned before, the characteristics of a non-fungible token and its interactions depend to a great extent on which standard it has been created with, since they are the guarantee that the asset will behave in a specific way.
In this section we will explore each of the standards that exist for NFT, both in the Ethereum blockchain and in other smart contract networks:
ERC721: It is the first standard in the market that was launched to represent non-fungible digital assets on the Ethereum network. It was developed by CryptoKitties company Dapper Labs in Solidity language. This is a heritable contract, which means that developers can easily create new ERC-721 compliant contracts.
It has a basic and simple design, focused on identifying the owner of the asset and allowing its mobilization on the blockchain. For this, the standard provides a mapping of unique identifiers in the addresses, which allow tracing the ownership of said token. They also have a code for transfers.
ERC1155: It is one of the most recent standards for non-fungible tokens, developed by the Enjin team. This contract incorporates the idea of ”semi-fungibility” to the world of NFTs, since, unlike ERC-721, individual and unique assets are not identified, but asset classes.
This new feature allows an address to own multiple items. For example, with the ERC-721 a user can have a unique and unrepeatable sword. However, with the ERC-1155 you can have multiple of these swords in the same direction.
The ERC-1155 becomes a more efficient non-fungible token for transferring multiple drives from one application to another. However, it also removes the ability to track the history of an individual sword. Because of this, it is more complex to know who and when has owned a specific item.
ERC-998 or compostable: NFTs created under the ERC-998 standard are the least common, this being a proposal from developer Matt Lockery. It is a more advanced version of the ERC-721 standard, which provides a template where fungible and non-fungible assets can be contained.
For example, in one direction there may be a unique and unrepeatable work of art or video game character, but several interchangeable elements of that character or work can also be housed in that same direction. For example, various swords, hats or potions may be stored, which complement the collectible item.
Outside of Ethereum:
Standard DGoods in EOS: The Mythical Games team has also dedicated themselves to developing a standard capable of being compatible with various blockchains. The initiative is called DGoods and it connects networks like EOS with Ethereum for the use of NFT.
NFT model for the Cosmos SDK network: The Cosmos blockchain also has its own module for NFT development. It is software capable of providing tools for the development of non-fungible tokens on the network. Thus, it is capable of interacting with other blockchain technologies.
Metadata and NFT
Another important element for the functioning of a non-fungible token is the metadata, so it is essential not to delve into the characteristics and functions that they fulfill. Metadata provides descriptive information for a specific address. That is, they indicate particular and unique data of the asset they represent.
For example, in a character in a game, the metadata can indicate the name of the element, show an image of it, a description of its design and personality, as well as some additional feature that makes it unique. On the other hand, if the NFT is a ticket for an event, it can include dates, what kind of ticket it is, and even the time of entry to said event. And if, on the contrary, it is a digital work, you can indicate the author of the work, the materials or technique that were used to carry it out, and if it has programmable mechanisms.
Each of these data can be stored both on and off the blockchain. However, this will depend on the decision of the token developers, as well as the requirements of the element to be created.
When the metadata is inside a blockchain, it means that the asset information is registered in the smart contract and is part of it. In other words, all the data resides in the token.
One of the advantages of this format is that the information cannot be erased or altered without being registered on the blockchain. In this sense, a malicious user cannot claim the authorship of work or modify the descriptions of a video game character, since they have been encoded together with the token.
Off the blockchain
Despite the obvious benefit of recording NFT information on a blockchain, most non-fungible token projects store their metadata off the blockchain.
This reality is largely due to the storage limitations that Ethereum possesses today. Due to this, standards such as ERC-721 have a method where applications can be told where to find the metadata of a given element.
The contract connects the user with the information through a public URL, while the developers register and safeguard the data of each token in centralized servers and IPFS (interplanetary file system, developed by Juan Benet).
Unlike the protection of a blockchain, this type of service is always exposed to the possibility of a hacker attack. Hackers can delete information, alter it or even steal it for their convenience, making this a vulnerable way to protect the identification of tokens.
Why are NFTs valuable?
To understand why an NFT of a meme, digital work or a collectible card, is a valuable element, it is important to take into account that the concept of value is subjective. Unlike fiat currencies, whose value depends on their liquidity, usability, and prestige – economic and monetary variables – people interact with non-fungible tokens in a similar way as they do with works of art, clothing, and money. material goods. That is, through taste.
Many NFTs are valuable to their buyers because their characteristics are “desirable”. A work of art can be beautiful to one human being and hideous to another. Also, some enjoy playing video games, others collecting cards, and still others watching movies. Not all human beings value the same things, but there are certain groups of people who have common interests and can determine which object seems most valuable to them.
nity , and this does not only happen on the blockchain. Wines that steep longer is more expensive, just as a necklace can be auctioned for millions of dollars if it belongs to a celebrity or has been created by a highly regarded jeweler.
Some artists and developers interested in NFT point out that the value of these tokens is in their immutability and in their unrepeatable nature. Because they are digital elements that are on a blockchain, data such as property and its transaction history are recorded forever. In this sense, it is easy to verify who is the owner of each piece and the authenticity of what is an original.
Another point of great importance that contributes to the valuation of NFTs today is speculation. As has happened with other financial technologies within the cryptocurrency ecosystem, the idea that an asset is going to be revalued over time and can generate huge profits, motivates more and more people to bet on this market.
Also, this is a pattern of behavior that occurs with the purchase of all “collectibles”, since people tend to buy such pieces with the promise that tomorrow they will be able to sell them more expensive. NFTs comply with this speculative behavior, since today many members of the ecosystem are compulsively acquiring non-fungible tokens under the premise that tomorrow they may cost even more money.
However, as with any investment, there is no assurance that the value and popularity of NFTs will persist over time. Although it can happen that certain of these digital elements become rare and collectible pieces, not everything that is created based on NFT is really valuable and could depreciate tomorrow if the interest in this market decreases.
Myths about non-fungible tokens
Although the value of NFTs can be subjective, like that of any artistic or collectible piece, the reality is that many still wonder where the million-dollar sales that are being made around this market come from. Are non-fungible tokens really that valuable? Or are they just another bubble?
These types of questions are generated due to various myths, controversies, and doubts that have been generated around the NFT market. As has happened with other technological advances (both within and outside the cryptocurrency ecosystem), it is debatable why a group of people blindly trusts that a code that represents a collage or a cryptographic cat can cost 10,000 or 100,000 US dollars. The figures are very high, and it is that some NFTs by unknown artists are selling better than works of art by famous renowned artists.
Beyond the possible speculation and overstimulation that is occurring in the NFT niche, it is important to note that experts on the subject consider that the relevance of non-fungible tokens as certificates of ownership or authenticity should be questioned.
We have previously talked about metadata and how it can be stored in centralized servers that, without the correct security, can be attacked by third parties. Well, the image of a work, its authorship and even its descriptions are susceptible to being altered and destroyed by malicious users in said applications.
Also, someone may try to link the same image to a new address and thus steal someone else’s work. In other words, NFTs are not foolproof certificates of ownership, and more research and development is still needed until more secure ways of storage can be stipulated.
On the other hand, NFTs can also be loaned for the theft of artistic content on the Internet. Let’s take an example: an artist publishes a drawing with a watermark (or without it) on his Twitter profile, a savvy user uses this image and generates an NFT to certify it as his own. This image then trades it in an open Ethereum market, profiting from the work of the other. The person who buys said piece would not only be buying pirated art but a digital element that has no real value since it is not the original and does not have the consent of the author. As if that were not enough, the author also loses the possibility of selling his art as unique and unrepeatable in any other market.
Users are creating NFTs of tweets that are not their own, as well as appropriate images without the consent of the author. Source: Gizmodo
Another weak point of NFTs is that they are not assets that last forever. Unlike works of art or collectibles that can last for centuries and even be restored, non-fungible tokens are exposed to the precariousness of the Internet and the fickleness of developers. It is true that a part of these assets makes life in blockchains like Ethereum, which are relatively immutable. But, it is also important to note that metadata such as the image, name, and other descriptions of the digital element interact not only with servers external to the blockchain but also with applications maintained by companies.
Let’s take another hypothetical case: a user buys an expensive character from a video game. In the blockchain it is immutable registered that that address belongs to said user, being the sole owner of the tokenized character. However, in order to interact with that character, another application is necessary, that of the video game world, which is managed by a company external to the blockchain community. If that company goes bankrupt tomorrow, the application will stop working and you will no longer be able to interact with the video game. That is, the user will only have some data encoded in a blockchain that belongs to a digital element that was once a character in a popular video game, which no longer exists.
One myth that is still believed about non-fungible tokens, and many users are confused about their value, is the idea that the scarcity of NFTs is the element that determines their price. At first, it was believed that the more original and unique an NFT is, the more valuable it would be over time, as has happened with the promise of Bitcoin with its limited issuance. However, in the previous section of this article, we have explored that the value of NFTs (as of any physical or digital element) is highly variable and subjective.
In the end, the price of NFTs has not been directly determined by their scarcity, but by the way in which users interact with said tokens. People buy an object because it is useful in context, they like it or it has a story that gives it prestige. In this sense, the most successful NFTs are those that serve to access events, give skills in video games, or are part of the history of the Internet itself.
Where are the NFTs stored?
Due to the fact that the NFT market is still in full development, there are not many specialized wallets in the storage of this type of tokens. Most of these wallets can be downloaded to cell phones or synchronized with Internet browsers. Also, some of these applications interact with hardware wallets, which are some of the safest devices to safeguard crypto assets.
Coinbase, one of the world’s best-known cryptocurrency companies, has been providing storage services for crypto assets for several years now. The application, which is available for iOS and Android phones, allows you to send and receive ERC-721 tokens. Likewise, it also accepts multiple other cryptocurrencies and Ethereum ERC-20 tokens. The wallet has Web Browser 3 to view digital elements in other applications, as well as an integration to its American exchange.
The Enjin brand has one of the most complete wallets for the storage of NFT tokens. The application supports both the ERC-721 and ERC-1155 standards, as well as BTC, ETH and various ERC-20 tokens, even supporting custom tokens. The wallet is compatible with iOS and Android operating systems. Likewise, it allows establishing the cost of transactions and gas rates that the user wishes to pay in Ethereum.
Metamask is one of the most popular wallets for Ethereum, being an application that can be synchronized with web browsers, such as Chrome and Brave. The wallet has support for ERC-721 tokens, as well as ETH and other assets under the ERC-20 standard. In addition to these features, it interacts with Web 3 to communicate directly with decentralized applications (Dapps).
Acquired by the Binance exchange some time ago, Trust Wallet is another of the wallet options for Ethereum that has established itself in the market. The app interacts with the exchange directly, as well as with Web 3 to communicate with NFT applications. Like Metamask and Coinbase, it only accepts tokens under the ERC-721 standards, although it also provides storage services for ETH and other assets that make life on the Ethereum blockchain.
Where to buy and sell NFT?
Cryptocurrency users are often used to the fact that the purchase and sale of crypto assets is carried out on exchanges or peer-to-peer platforms . There is a wide variety of companies that provide exchange services for native cryptocurrencies or other crypto assets, some of the best known brands being Binance, Bittrex, Bitfinex or Kraken.
However, in the case of NFTs, the situation varies drastically. Since non-fungible tokens are assets with multiple use cases, it is common that there is not a homogeneous offer of exchanges dedicated to the sale of all types of tokens. Although there are open markets that are exclusively dedicated to these crypto-assets, companies, and platforms dedicated to the sale of a particular token or NFT categories proliferate even more strongly.
For example, there are markets dedicated solely and exclusively to the sale of digital art. Also, companies that issue NFTs for games, such as CryptoKitties, often provide services for the creation and sale of these digital elements. In this way, small markets are being created that can be accessed by these tokens.
Next, we will mention some of the places where you can buy any NFT of your liking:
Currently there are several platforms that are exclusively dedicated to the trade and auction of works of art created from NFT. For example, there is a social network, called Cent, where cryptographic art is discussed and shared. Because the web has a micro-payment system, it also lends itself to the purchase and sale of digital works of art.
However, some of the best-known markets for the acquisition of these parts are:
SuperRare: it is described on the web portal as a market where “Ethereum certified” pieces of digital art are sold. The platform allows artists and sellers to show their collections to other users, stipulating the price they want to receive for the works for sale. It also has a secondary market for the resale of acquired parts.
Foundation : With a simple , white-background web design , Foundation serves as a portal to auction digital art in a matter of hours. Users can propose one of their pieces and let the market bet to keep it.
Nifty Gateway: With a market ordered by artist names and the best-selling pieces, Nifty Gateway is another option to acquire NFT art issued on Ethereum.
From the famous CryptoKitties to the popular game MyCryptoHeroes, there are many interactive NFT token initiatives that have their own markets to access new characters and create your own tokens. Users who are interested in buying a crypto cat, for example, can adopt it on the video game’s website where there is an extensive catalog of newly created cats.
On the other hand, those who start playing on platforms like MyCryptoHeroes, have direct access to a “heroic” character and can collect strange gems to gain strength in the game. These characters can then be sold in open Ethereum markets that are focused on NFT, giving them the ability to become trading assets.
Axie Infinity is another project that is dedicated to creating and selling cartoon NFT characters to fight. It is in the TOP 10 of the most popular cryptocurrency platforms on the market, according to CryptoSlam, and has had up to 100,000 active users per month over the course of 2020.
When some user wants to sell an NFT meme, a strange digital art, a special crypto cat, or a super-powerful hero of their video game, they can go to the open markets that trade non-fungible tokens.
Open Sea is the best known and most popular NFT exchange on the market at the moment, being cataloged by Dapp Radar as “the eBay of Ethereum”. The platform is home to up to 200 NFT categories, enabling the trading of non-expendable assets for sports, games, art, trading cards, weird memes, VR terrains, and even CryptoKitties cats.
Users only need to have ETH and a Metamask wallet, built into either their Chrome browser or Brave. This application will allow you to interact directly with the Open Sea market, where you must create a user to start trading. The platform connects both sellers and buyers of non-fungible tokens so that anyone can access or trade their NFTs in this market at whatever price they see fit.
Just as there are these platforms dedicated to the sale of art or games, there are also other initiatives that are dedicated to even more exclusive markets. For example, the sale of tweets, trading cards, or unique NBA tokens.
Valuables is the platform where Jack Dorsey sold the NFT of the first tweet he posted on Twitter. Users can post screenshots of tweets converted into non-fungible tokens, which are auctioned to the highest bidder on the main page of the website.
For those who are more interested in trading cards and memes, Myth.Market is dedicated exclusively to this niche. The portal trades with cards from GoPepe, Garbage Pail Kids, and cards from Blockchain Heroes.
Those interested in sports can also collect basketball NFTs. The NBA Top Shot store sells NBA game videos as non-fungible tokens on the Ethereum network, mobilizing more than $ 200 million in purchases.