Types of NFTs
What are Non-Fungible Tokens?
NFTs are differentiable from one another and are not interchangeable. This is why they are differentiated and desirable in certain cases.
As mentioned earlier, one real-life example would be a limited-edition baseball card. Another example would be a plane ticket since you cannot share your ticket with someone else.
This is a digital asset that you can create to prove the authenticity and ownership of an asset through cryptography.
To illustrate, a virtual property, like a virtual piece of art, can be tokenized by creating a Non-Fugible Token. The NFT token you own now indicates that the ownership of the artwork belongs to you.
NFTs are not interchangeable with your artwork since they are unique. They are stored on the blockchain as your property.
One of the best examples of how a token can be created to create scarcity, which in turn creates value, is CryptoKitties, which I will discuss in detail in the next few paragraphs.
The Digital Cat on CryptoKitties was sold for USD 120,000 using this principle. Non Fungible Tokens can also be defined as — a type of token that is verified and digitally scarce; it does not require any central authority to manage it.
NFTs accomplish this by using blockchain, which enables these tokens to be held in a decentralized manner to keep digitally scarce items.
How do NFTs work?
While traditional works of art like paintings are valuable because they are unique, digital files can be easily and endlessly copied.
Artworks are “tokenized” with NFTs to create a digital ownership certificate that can be bought and sold.
In the same way, as for crypto-currency, the blockchain is a shared ledger that records the owner of the stuff.
The records cannot be falsified because thousands of computers are all maintaining the ledger. NFTs may also contain smart contracts giving the artist, for example, a share of future sales.
Types of NFTs
A developer can easily create new ERC-721-compliant contracts by enabling them to import the OpenZeppelin library. ERC-721 was the first standard for representing non-fungible digital assets on the Ethereum blockchain.
A unique identifier is managed by ERC-721, which features methods for tracing the owner as well as permission methods for the owner to transfer the asset to others.
It offers the fungibility provided by the ERC-721 standard as well as the functionality provided by the ERC-1155 standard (meaning that an ERC-721 asset can be built using ERC-1155).
With ERC-1155, a unique ID represents a class of assets, and there is an additional quantity field to designate how much of the class a particular wallet has. The assets belonging to the same class can be swapped back and forth, enabling individual transfers.
In the future, Cryptokitties plans to move from Ethereum to FLOW, which uses a proof-of-relationship consensus model. NBA Top Shot is a crypto game that runs on the FLOW blockchain.
Tezos is a blockchain platform that supports the sale of NFT art by way of a proof of stake model.
Create, Buy & Sell on the Social NFT Marketplace