What is an NFT?
NFT is an abbreviation for Non-Fungible Token. These are unique digital goods whose transactions are made in cryptocurrencies and exchanged using a blockchain protocol (blockchain† A non-fungible token is often presented as a proof of ownership, recorded in a public, decentralized digital ledger.
A non-fungible item is a single item that is not interchangeable. For example, money is fungible: you can exchange a $10 bill for two $5 bills or cryptocurrencies in between; but not a work of art against a piece of land, because the nature of their value is not the same.
What is the difference with a cryptocurrency?
The answer to this question largely follows from the previous one. While NFT transactions are usually made in cryptocurrencies (bitcoin, ethereum, etc.), they are not cryptocurrencies themselves. It is technically possible to exchange an NFT for one or more NFTs in a decentralized manner, but the estimation of the value will be very subjective between both parties, as in an exchange system.
Before an item becomes an NFT and is offered for sale, it must be listed on the blockchain† We then speak of “minting an NFT”, i.e. registering the digital asset on the blockchain through a smart contract (smart contract, autonomous contract). Platforms specialize in this process, which is a paid service.
Yes, but what is one? smart contract †
The smart contracts are contracts that rely on technology blockchain to make their terms and conditions tamper-evident. These are computer programs that automatically execute a series of predefined instructions.
What can be an NFT?
Almost everything. It is of course the art market that seems to master the subject the fastest, but metaverse specialists also sell virtual land, for example. Jack Dorsey has sold his first tweet in NFT format. Secure so rarea game halfway between the Panini album and the concept of My little lawn, NFTs are football cards. Recently, a 1.2 kg truffle was even offered in NFT format. In this specific case, the buyer will receive nothing but a title deed and not the truffle itself.
Ok, but what kind of files?
It can be an image, a video, a sound file, an animated file, a 3D object… On OpenSea, the maximum size of downloadable files is 100MB.CryptoPunks, worth millions of dollars, is nothing more than a collection of jpeg files that have become NFTs. In addition, often the NFTs are just the certificates of ownership of a link that returns to a server that stores the image or video in question.
Where do you buy an NFT?
There are multiple platforms. The best known and most widely used is OpenSea. It allows you to sell and buy NFTs, and it is compatible with: blockchains Ethereum, Polygon and Solana. There are tens of millions of NFTs.
Can we buy in a few clicks?
No. You must first have cryptocurrencies, regardless of the platform used, but also have a wallet (for example a Metamask) linked to the platform. This portfolio allows you to carry out the purchase operation with the NFT platform. This therefore requires you to master a little, if not a lot, of the various tools related to cryptocurrencies.
Finally, what have we got?
This is a somewhat special point with NFTs. When you “own” one, you end up owning only what proves the purchase of the underlying asset. It’s a bit like buying an item in a store and only leaving with the invoice or a customer reference. As for the digitized object, it remains stored by the token issuer… on a highly centralized server.
What’s Wrong With NFTs?
Many things. NFTs are criticized – and we leave everyone free to think what they want on this subject – for their speculative aspect. Cases of plagiarism and re-use for commercial purposes without the consent of well-known brands have also been identified.
And what about the ecological footprint?
This is certainly the point that has caused the most ink to flow. Most use proof of work to work, which requires high computing power. And who says high computing power, says high power consumption, which in particular fuels the bitcoin debate. However, its consumption is blockchains is broadly the same whether NFTs are issued or not. Loads of blockchains, such as Flow or Tezos, try to meet this environmental challenge with the proof of stake method of validating exchanges. These exchanges are secured by computers or servers that operate and consume more conventionally, such as other networks of computers or conventional computer servers. The Ethereum Foundation has also announced that it will switch to this system in due course.
Proof of work? Proof of stake?
Proof of work is aptly named. To make the exchanges within a blockchain thus forming new blocks, certain nodes of the network attempt to solve a cryptographic conundrum, using the computing power of their computer hardware. The first to bring the correct solution (the proof of work) win the right to create a new block and are paid with the crypto of the network as a thank you for the effort made.
Without going into too many technicalities, proof of stake replaces the mechanism based on computing power with another, based on the active use of its capital: it is enough to esct a certain amount of the network’s cryptocurrency to participate in its validation, and get paid for it.
What is the most expensive NFT ever sold?
Work the fusion was sold on the Nifty Gateway website for a handsome $91.8 million. This work consists of 266,445 digital units shared by 28,983 buyers. Technically, therefore, it does not represent any NFT. In this case it would rather be: Every day: the first five thousand daysa collage of 5,000 photos, sold for $69.3 million.