What is a non-fungible token?
Non-fungible tokens (NFTs) are assets, such as artwork, digital content, or video, that have been tokenized via a blockchain. Tokens are unique identification codes created from metadata using a cryptographic function. These tokens are then stored on a blockchain, while the assets themselves are stored elsewhere. The relationship between the token and the asset is what makes them unique.
A non-fungible token (NFT) is the opposite of a fungible token, which describes the fungibility of a token. For example, let’s say you have three notes with identical smiley faces drawn on them. Tokenizing one of them would make that note distinguishable from the others—making it non-fungible. The other two notes are indistinguishable, so each can take the place of the other.
NFTs can be traded and exchanged for cash, cryptocurrency, or other NFTs. It all depends on the value the market and owners assign to them. For example, you could draw a smiley face on a banana, take a picture of it (with metadata attached), and tokenize it on a blockchain. Whoever owns the private keys associated with the token owns the rights associated with it.
Cryptocurrencies are also tokens; however, the key difference is that two cryptocurrencies from the same blockchain are interchangeable – they are fungible. Two NFTs from the same blockchain may look the same, but they are not interchangeable.
How NFTs work
NFTs are created through a process called minting, in which the asset’s information is encrypted and recorded on a blockchain. The minting process creates a new block through a high-level process, the NFT information is validated by a validator, and a new block is finalized. This minting process often includes the incorporation of smart contracts that assign ownership and manage NFT transfers.
As tokens are created, they are assigned a unique identifier that is directly linked to a blockchain address. Each token has an owner, and the ownership information (i.e., the address where the issued, minted token is located) is publicly available. Even if 5,000 NFTs are minted of the exact same type (similar to a general admission ticket to a movie), each token has a unique identifier and can be distinguished from the others.
Many blockchains can create NFTs, but they may be called by different names. For example, on the Bitcoin blockchain, they are called ordinals. Like Ethereum-based NFTs, Bitcoin Ordinals can be bought, sold, and traded. The difference is that Ethereum creates tokens for the asset, while Ordinals assign serial numbers (called identifiers) to satoshis, the smallest denomination of bitcoin.
Blockchain and fungibility
Like physical money, cryptocurrencies are generally financially fungible, meaning they can be traded or exchanged for each other. For example, the value of one bitcoin is always equal to another bitcoin on a given exchange, similar to how each U.S. dollar bill has a conversion value of $1. This fungibility characteristic makes cryptocurrencies suitable as a secure transaction medium in the digital economy.
NFTs, on the other hand, change the crypto paradigm by making each token unique and non-fungible, making it impossible for one non-fungible token to be “equal” to another. They are digital representations of assets and are likened to digital passports, as each token contains a unique, non-transferable identity that distinguishes them from other tokens. They are also extensible, meaning that one NFT can be combined with another to create a third, unique NFT. The crypto industry calls this “breeding.”
How to make money with NFT
It depends on what the NFT represents. If it is tokenized real estate, the NFT would be exchanged for the market value of the property, which, if it appreciates, would be a return to the seller. If the NFT were a picture of a monkey in a cap, it would depend on the market value of that token. If its price had increased since the last purchase, the seller would make a profit.
What is the concept behind NFT
The idea behind NFTs is to create tokens that represent ownership. A token can represent anything from a digital image to partial ownership of an interstellar spaceship. In theory, because they are created using blockchain technology, they are immutable, secure, and do not require third-party intervention.
The point
Non-fungible tokens represent an evolution of the concept of cryptocurrency. Modern financial systems consist of sophisticated trading and lending systems for various types of assets, from real estate to loans to works of art. By enabling digital representations of assets, NFTs represent a step forward in reinventing this infrastructure.
To be sure, the idea of digitally representing physical assets is not new, nor is the use of unique identification. However, when these concepts are combined with the benefits of the tamper-proof blockchain, smart contracts, and automation, they become a powerful force for change.
KASPA - KRC721 - NFT
The Layer2 network connected to the KASPA network, on which NFTs can be created and transacted, is called the KRC721 network. It is built on the KASPA BlockDAG protocol and benefits from its security and speed.
For now, the NFTs published in this network are considered mini artworks, they can even be considered a digital stamp collection, the value of which will be determined by the supply and demand of collectors in the future.
KONAN NFT collection
Click here to open the collection
A unique collection of 10,000 pieces.
What's interesting is that they are not AI-generated images, but mosaics of 8 different layers stacked on top of each other, each of which was drawn individually, using digital tools, but by hand.
Another interesting thing that adds to the uniqueness is that so many different layers were drawn that if we put together all possible variations of the layers, over 20 billion different NFTs could be created, each of which would be unique.
In the case of similar NFTs on average, if they are issued in the same quantity, then a variation of 100 thousand to 1 million pieces may be acceptable. In comparison, the thousands of times variation of KONAN NFTs significantly increases their value and uniqueness.
Minting will begin at a specified time after the deployment, which means the creation of the NFT on the network.
Later, the NFT that has already been created (minted) can be stored on the marketplace connected to the wallet. Everyone can see it, but only those who are connected to the marketplace with the assigned wallet can access it.
Later, you can list it for sale and set the price you want to receive for it. If the buyer comes and accepts the price, they can buy it on the spot, through that interface.
Click here if you want to read detailed information about NFT minting.