Blockchain is creating a buzz in the world these days, and non-fungible tokens or NFTs are coming up prominently in the smart contract domain. Decentralized financing or DeFi rose incrementally in 2020, despite the hindrances posed by the COVID-19 pandemic. But NFTs are surely getting a huge share of the pie, given how similar they are to ERC20.
In simple terms, non-fungible tokens are unique tokens and do not have any substitutes like them. Although they are similar to the ERC20, the main difference lies in the fact that ERC20s are fungible or “interchangeable,” while NFTs are not.
Take, for example, you have a dollar bill, and you know it's going to be worth $1. Irrespective of the dollar bill, it is interchangeable or replaceable even though your bills will have different serial numbers.
Nonetheless, you can interchange your dollar bills since they will be worth $1. You can use NFTs to prove ownership of certain unique items like art, real estate, and collectibles. Only one person at a time can own an NFT and it’s secured by the Ethereum (ETH) blockchain.
Creating your own NFTs
The process of developing NFTs is certainly not an easy one for non-coders. It demands monetary investment. However, if you are clear about the process, you should be able to make whopping sums of money from your own creation.
Developing NFTs involves three steps: the creation of the token, minting of the token, and selling it. If you are buying NFTs, you are likely to find the process similar to an online auction. But having a digital asset, you need to choose an NFT market if you wish to mint the token. Some examples of NFT markets are SuperRare, Nifty Gateway, and Rarible. On this market, you can upload and mint your digital asset into an NFT on the Ethereum blockchain.
However, some of the larger crypto exchanges ask minters to show published works. Once you cross this step, you will have to pump in some money to add your transaction. The fee is likely to vary according to the level of congestion on the Ethereum network. You will have to incur some costs while naming your NFT and selling it on the market. The entire process starting from publishing to minting to selling NFTs will certainly cost you more than a thousand dollars.
It would be apt to say that NFTs present an amazing technology that can transform business ownership and supply chains. However, the technology is at its fledgling state and there’s a lot of work to be done. Hopefully, it goes mainstream in a way that’s practical and beneficial for everyone.
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CSSF issues a new white paper on DLT & blockchain
Techsense team I 1:10 pm, 21st January
While DLT is a technology that has been used for many years, the integration of such evolving technology-based innovation in financial services and markets is a continuing challenge for regulators. In this context, the CSSF just issued a white paper aiming at encouraging stakeholders to conduct a proper assessment of the risks related to the Distributed Ledger Technology and its use in the provision of services in the financial sector.