The Ultimate Beginners’ Guide to NFTs
What are NFTs?
NFTs, or Non-Fungible Tokens, are a type of unique digital assets. They cannot be interchangeable, as each NFT is unique and has its distinct value. For example, in the CryptoKitties game, each digital kitten is an NFT with its unique genome and attributes.
It’s unlike buying an iPhone smartphone, which is replaceable whenever you lose or break it. NFT represents a distinct, one-of-a-kind digital asset that is non-fungible and can only be bought and sold as an individual entity.
Why are they valuable?
One of the key features of NFTs is that they represent real-world assets. For example, a company could create an NFT to represent shares in the company. Investors of the company would then own these NFTs, and they would continue to hold value as long as the company performed well.
NFTs are also valuable because there is a finite supply. While new cryptocurrencies can be created at any time, NFTs have a set number that will never go up or down. This finite supply makes them an attractive investment option as they are less susceptible to inflation.
The Origins of NFTs
The first NFT was created in December of 2017 with the release of CryptoKitties. The game was an instant success, and quickly became one of the most popular applications on the Ethereum network.
CryptoKitties is a simple game where users can buy, sell, or breed digital kittens. Each kitten is represented by a unique ERC-721 token, which means each one is a unique item with no identical copies.
Since the release of CryptoKitties, there have been several new NFTs created on the Ethereum network. The open-source nature of Ethereum allows developers to create their tokens and applications that utilize them. Let’s go over a few of the most common types of NFTs below.
Gaming NFTs
The most popular types of NFTs are those that are used in gaming. Games like CryptoKitties, Etheremon, and Cryptocollectibles all utilize the unique attributes of the Ethereum network to create an immersive and exciting gameplay experience.
CryptoKitties: The World’s Most Popular NFT
CryptoKitties is perhaps one of the most popular games to come out as it utilizes ERC-721 tokens and allows players to buy, sell, breed, and exchange their digital kittens.
Since its inception in December 2017, CryptoKitties has become a worldwide sensation and often holds the record for the most transactions on the Ethereum network.
The game has even spawned several CryptoKitty millionaires, as some of the rarest and most unique kittens have sold for well over $100,000.
Etheremon: The World’s First 3D Game with NFTs
Etheremon is a 3D monster-catching game it was one of the first games to use NFTs. The game allows players to catch, train, and battle digital monsters. These monsters are represented by unique ERC-721 tokens, which means that each one is a unique item with no identical copies.
Players can also purchase and sell these tokens on various online marketplaces.
Cryptocollectibles: The World’s First Internet Meme Economy
While internet memes may seem like a strange choice to be represented as NFTs, the creators of Cryptocollectibles don’t see it that way. They describe their game as “The first working project to show how blockchain can allow brands and celebrities to tokenize their intellectual property and create a market for it.”
The game allows users to purchase, and collect various internet memes. These memes are represented by unique ERC-721 tokens, which means that each one is a unique item with no identical copies.
Players can also purchase and sell these tokens on various online marketplaces.
Social Media Tokens
Another popular use for NFTs is social media tokens. These tokens can represent various aspects of a user’s online identity.
Syscoin is one example of a project working on creating social media tokens. Their goal is to create a “complete decentralized ecosystem for social media.”
Thus, each user can have a unique SYS token representing their online identity. Besides using it for social media, the tokens can also be used elsewhere on the blockchain.
Blockchain-Based Art
One of the most talked-about uses for NFTs is blockchain-based art. We’re already seeing some artists create pieces of art that are entirely digital and represented by a unique ERC-721 token.
Each piece of art is a unique item with no identical copies, making it very valuable. While some artists have expressed concerns about the blockchain replacing traditional artforms, others see it as another platform to explore their creativity.
What does this mean for investors?
One of the most crucial issues that many investors face when deciding to invest in cryptocurrency is identifying digital assets in which to invest. Many new coins and tokens come out every day, and it can be difficult to determine which ones will succeed.
With NFTs, you already know what you’re investing. Each NFT represents a particularly unique item, and the value will depend on the popularity of that item. So if you want to invest in something like CryptoKitties, all you have to do is buy one or more CryptoKitties assets.
What is the future of NFTs?
NFTs are becoming increasingly popular in the blockchain world, and there is no sign that this trend will slow down. With the increase in games using NFTs such as Cryptocollectibles and Etheremon, we can expect to see more artists turning to NFTs for their art, which further increases the value of NFT assets.
While the future of NFTs cannot be predicted with certainty, there is a good chance that this trend will continue to grow.
