What is NFT? It has created a fever since the last months of 2020 and early 2021 in the cryptocurrency market. This is an encrypted token on the blockchain technology platform. So what’s so special about it that makes it a craze?
1 – What is NFT?
Stands for Non Fungible Token which means that the token is non-fungible or can be understood as a unique token. This token is encrypted on the blockchain platform and represents a unique digital asset.
NFTs are not interchangeable, acting as a certificate of ownership in the digital realm.
In 2017, NFT associated with the name cryptokitties once choked the Ethereum network, causing the market to stir. Since then, the NFT ecosystem has become more and more complete.
NFTs can be stored on blockchain wallets and used to buy/sell transactions similar to coins.
This represents a unique and rare digital asset that is traded, bought/sold on the marketplace in the ecosystem.
For example, a virtual cat or a virtual piece of land created with a unique, unique identifier is sold on the marketplace in the ecosystem. This property collectors are like collecting antiques and rare items in the 4.0 technology era.
2 – How does NFT work?
NFTs exist on an address just like other blockchains. But more specifically, it cannot copy or transfer without the permission of the owner.
The price of NFT is also subject to fluctuations according to the law of supply and demand in the market, NFT tokens have a unique value, traded in open markets like OpenSea.
3 – The application projects NFT
The majority of NFT application projects are games such as:
Axie infinity: in-game items developed with NFT tokens.
Decentraland: this game is considered as a decentralized virtual world, players in this game can own and exchange virtual lands, it items with each other.
4 – Potential and limitations
4.1 – Potential
Trump picture from hashmasks generated a record profit of up to 100,000% in just 3 days. It is the scarcity and uniqueness of the NFT that makes the value of this digital asset hugely profitable.
Assets you can quickly trace the origin, transaction history, owner on the transparent system of the blockchain. This completely eliminates the possibility of counterfeiting.
This has created a unique, scarce asset collection market on 4.0 technology.
4.2 – Limit
Not everyone has a hobby of collecting digital assets, so its obvious weakness is poor liquidity. That means it will be difficult to sell when bought.
The value of the NFT digital asset is priced according to sentiment. Depending on the buyer, they will pay different high and low prices.