Non-fungible tokens, or NFTs, are unique blockchain assets known as valuable collectibles. But isn’t there something more about them? Let’s find out.
You’ve probably heard about crypto collectibles like CryptoKitties, CryptoPunks, or Gods Unchained. Of course, NFTs are more than that, these are just a couple of examples. They are unique items, and the ownership is proved by a record in a respective blockchain. So, basically, blockchain plays a role of a database that contains information about all unique items and ownership over them.Real-life will help to understand it better. There are some unique things like, let’s say, a painting. It has its own features and exists in one copy. There is no other exactly like it. Non-fungible tokens represent such things in a digital world. They are unique, and they are limited.One of an NFT’s use cases is the transfer of ownership over art pieces or in-game items. Blockchain confirms that a certain item is unique and indicates its current owner. The same mechanisms can be used for real estate, rare wine bottles, jewelry, and other valuable things.
So, here are the key features of NFT tokens:
Compatibility. NFTs follow certain technical standards like ERC721 or ERC1155 which means that there are features and functionalities they must have. In other words, NFTs are a standardized way to represent ownership of a certain asset. So, basically, trading NFTs on an exchange is a way to transfer ownership rights. Besides, these unique blockchain assets do not just exist on a certain exchange. Similar to other tokens, NFTs can be listed and traded on multiple exchanges.
Uniqueness. NFT represent a unique and limited asset. In theory, it means that their value as a collectible will increase over time due to the rise in demand. However, the supply limitation of NFTs is different for fungible cryptocurrencies like Bitcoin. There is a fixed max number of Bitcoins that will ever exist but, technically, it’s not really important which one of Bitcoins you have. One Bitcoin is one Bitcoin. In the case of NFT, it matters what exactly you have. Let’s take cards in Gods Unchained as an example. One card is different from another, and their value isn’t the same as well.
Liquidity. The main idea is that if something is rare, the demand is high. High demand ensures that it would be easy to sell an NFT at any given moment. That’s why buying and trading NFTs is an interesting opportunity for investors.
One of the most obvious choices is the world’s biggest crypto exchange—Binance (sign up here). The Binance ecosystem includes two ways to store and transfer NFTs—Trust Wallet and Binance Smart Chain. Trust Wallet allows you to store tokens created following the main NFT standards like ERC721, ERC1155, or BEP-721. NFT projects on Binance include Enjin Coin, Decentraland, and others.