The non-fungible token space has emerged as one of the most exciting trends in crypto over the past year, with Ethereum-based ERC721 tokens leading the charge. In this guide, we’ll be looking at what non-fungible tokens are and how they work. If you’re interested in buying or selling NFTs but aren’t sure where to start, this article will be your guide through the process.
What is an NFT?
An NFT is a blockchain token that cannot be divided into smaller parts and cannot be traded or exchanged for other tokens. For example, if you’re familiar with Cryptokitties, they are considered non-fungible assets since each of them is unique. The most common use cases for NFTs are digital art, collectibles like Cryptokitties and gaming items like CS:GO weapon skins. However, there are many more possibilities when it comes to using NFTs in games. Let’s take a look at some examples of how NFTs can be used in different games.
How do they work?
Most of today’s cryptos have their value, in part, derived from utility. They can be used as a store of value or for digital transactions. NFTs are different. Their perceived value isn’t tied to utility and instead derives from rarity, history and collectability. For example, you might want your CryptoKitty because it has a rare eye color or because it was purchased by an early crypto investor. It’s important to note that NFTs aren’t limited to physical assets. Many developers are creating digital assets that represent intangible items like songs, stories and even loyalty points. It’s also possible to create tokens that represent something other than a tangible item (like a vote) or something that doesn’t exist yet (like equity). The uses for non-fungible tokens are endless—and we haven’t even scratched the surface yet!
When will we see them mainstream?
The NFT market is already growing rapidly. According to DappRadar, there are over 50 games with NFTs and crypto collectables, and some platforms such as Enjin have gone from nothing to a $70 million market cap in just 6 months. We expect that growth rate will continue as more consumers become aware of the potential value of digital art. This isn’t just gaming—the appeal of trading, owning and selling art goes far beyond gamers alone. For example, CryptoKitties has spawned an entire subculture around collecting art pieces based on real cats (some for sale for thousands of dollars). As long as people want to own and trade collectibles, we’ll see a continued rise in popularity for NFTs.
Where can I buy them now?
Nowadays, there are multiple platforms that allow users to buy and sell NFTs. These include: OpenSea, OPSkins, Rare Bits and Bancor. It is important that you check out each of these platforms before buying into NFTs because they all have different value propositions. For example, Rare Bits allows you to make your own market while OPSkins already has a lot of buyers and sellers on its platform. This means that if you’re looking for liquidity, it might be better to go with OPSkins. However, if you want full control over pricing or wish to create your own market then Rare Bits might be better suited for you.