What is NFT
The full name of NFT is non-fungible token. Chinese is usually translated as "non-fungible token" and is usually regarded as "digital asset".
"NFTs are tokens we use to represent ownership of unique items. NFTs allow us to tokenize items such as art, collectibles, and even real estate. They have only one official owner at a time and are protected by the Ethereum blockchain – no one can modify the ownership record or copy-paste a new one based on an existing NFT."
Scene one
The earliest successful NFT experiment: cryptopunks. A set of ten thousand pixel art characters.
Although these works can be viewed by anyone, on Ethereum it has a single owner. Some of these rare pieces trade for millions of dollars.
Scene 2
There has been a very ancient NFT in history, a famous work – "Every Day: The First 5000 Days"!
On March 11, 2021, this NFT artwork with a starting price of only US$100 was finally successfully sold at the Christie's auction house for a sky-high price of "US$69.3 million" (equivalent to approximately RMB 450 million). Not only did it significantly refresh the transaction record for a single digital artwork, it also almost single-handedly brought concepts such as "NFT" and "digital collections" to the public's attention.
The name of this work is: "Everydays: The First 5000 Days" ("Everydays: The First 5000 Days"). Its author is the famous American graphic designer and animator "Mike Winkelmann" (also known as Beeple).
As a top figure in the digital art world, Beeple's digital paintings are innovative, avant-garde and eye-catching. Not only have they attracted 1.8 million fans on social media, they have also collaborated with internationally renowned brands such as Louis Vuitton and Nike, as well as with entertainment stars such as Katy Perry and Childish Gambino.
From May 1, 2007 to the end of 2020, "Beeple will create and upload a new digital work every day" and name it "Everyday".
On February 16, 2021, after splicing 5,000 works into a huge 316MB JPG file, "Every Day: The First 5,000 Days" was born. In order to ensure the uniqueness of the work, Beeple also casts the digital collection in the Ethereum blockchain, which greatly protects the copyright of the work.
If a painting is an NFT, can an article be an NFT? What about a razor or a Rubik's Cube? "What exactly is NFT? Why does it have such huge value?"
"Non-fungible token" consists of two parts: non-fungible and token. Before analyzing non-fungible, let us first explain token. The token here refers to a record in the blockchain.
a little history
The concept of blockchain first appeared in Bitcoin. Bitcoin's white paper introduces the "chain of blocks" used to track and encrypt historical data. The concept of blockchain has also become popular on the Internet along with this idea.
Just like traditional cash, Bitcoin is fungible, in other words, we can make two Bitcoins interchangeable without changing their value. The Bitcoin network does not track each coin and assign them a unique identifier. Instead, Bitcoin tracks the number in each account and records each transaction.
Inspired by Bitcoin, other blockchain systems have expanded new functionality on top of it. Ethereum adds general computing capabilities based on the consensus model of the Bitcoin blockchain and is committed to becoming a world computer for "programmable money."
Ethereum has its own original token, Ether. In addition to storing value, Ethereum can also pay for computing costs in the form of gas fees. Ethereum, like Bitcoin, is fungible, but Ethereum supports users to create their own tokens in the form of smart contracts, and users can implement their own logic in smart contracts.
Smart Contracts: Smart contracts digitize an agreement by converting its terms into computer code that automatically executes when the terms of the contract are met.
In the early days, most smart contracts implemented tokens similar to Ethereum, but soon people tried to use unique tokens to represent data.
non-fungible
Compared with traditional currencies, each currency has its own unique code identification, but even with a unique code, two 100-yuan currencies can still be exchanged at equal value, so the unique code cannot be completely irreplaceable. If there is a RMB with a painting by Qi Baishi on it (painting on RMB is illegal, this is just to illustrate the problem), then the value of this RMB is different. You can exchange this RMB for anything of any value, as long as both parties to the transaction are willing.
In the same way, by allowing each token to contain arbitrary data, NFT becomes a medium for expressing creativity and can also be used as a transaction and accounting unit. The value of an NFT is highly dependent on the data it represents.
Because they are on the same network as digital currencies, NFTs benefit from the security guarantees of the blockchain and can use their accounts and tokens to complete transactions.
how to persist
A major function of Bitcoin is to allow all participants to achieve a consistent "state". For Bitcoin, "state" is the balance of each account, and for Ethereum, the shared state is the input and output of the smart contract. Because network users are distributed all over the world, it takes time to reach a consistent final state, and there will also be some rules to prevent users from cheating. But once the state is consistent, it becomes a historical record of the blockchain.
As new blocks are added to the blockchain, the cost of modifying earlier blocks becomes higher, and soon changing all historical blocks becomes impossible.
The durability and stability of the blockchain are just enough to ensure the value of NFT for a long time. As long as the blockchain itself operates normally, NFT data will not be lost. At the same time, by providing digital currency to reward operators to ensure the long-term existence of the network, the blockchain will survive for a long time.
Digital content of applicable scenarios for NFT
Currently, many content creators (such as self-media workers) publish their works to third-party platforms. The platform sells advertisements to the authors' fans to make money for the platform. The creators can get exposure to their works and a small amount of rewards. NFT has completely changed this matter. Creators do not need to hand over content ownership to the platform. When creators want to sell content, they receive real money that matches the value of their work.
game items
NFTs provide a record of ownership for in-game items. This allows players to truly gain ownership of game items while experiencing the game, and when the items appreciate in value, they can also be sold. Promotes the development of finance in the game.
domain name
In Ethereum, NFT provides a memorable domain name for your Ethereum address. For example, you can use sun.eth to represent your actual address of 23424jihixhufsd…. This is the same as when we use domain names instead of IP addresses.
With a domain name, it is convenient for us to conduct transactions in Ethereum. At the same time, a well-known domain name itself is also valuable.
physical items
The field of physical items is currently relatively slow to develop, but with cars, unique fashion items and NFT pegs, we can use NFT to represent our sole ownership of these items. At the same time, NFT can be used to trade and mortgage physical items.
Investments and Collateral
Loans can be obtained on Ethereum by staking NFTs.
The creator of an NFT can also create "shares" for it, allowing multiple people to jointly hold an NFT and thus become a "shareholder" of this NFT. Shareholders can have a say and post-transaction dividends. People with partial ownership of an NFT can manage the asset through a centralized autonomous organization (DAO).
Decentralized Autonomous Organization (DAO)
Websites with some practical applications: How to make NFTs as a developer
There are two commonly used standards for NFT: ERC-721 and ERC-1155. ERC-1155 was proposed later than ERC-721 and is basically compatible with the ERC-721 standard.
Recently, the EIP-2309 standard has been proposed.
As a developer, minting NFT is a relatively complicated process. You can try it by referring to the examples below.
https://ethereum.org/en/developers/tutorials/how-to-mint-an-nft/#main-content
https://nftschool.dev/tutorial/minting-service/#mint-an-nft
As a normal user
As an ordinary user, you can use third-party platforms to participate in the production, trading, and collection of NFT.
Typical foreign platforms
1.OpenSea
Platform introduction:
Opensea is the world's largest NFT trading platform and a decentralized exchange that provides peer-to-peer Ethereum Fungible Token (NFT) trading. The platform has the widest variety of NFT products, including encrypted artwork, game products, virtual land, digital copyrights, etc.
Release model:
Users have low entry barriers and can freely create and trade NFTs here. The platform supports selling mechanisms such as fixed price, price reduction, and maximum bid.
Representative products: CryptoPunk, CryptoKitties
Related fees:
The platform currently supports 241 cryptocurrencies as payment methods, and OpenSea will charge 2.5% of the transaction amount (including first or secondary sales) as service fees. Creators can freely set royalties within 10%, and OpenSea will transfer these NFT royalties to the payment address designated by the NFT creator every two weeks.
2.Rarible
Keywords: Token governance, cross-platform management
Platform introduction:
Rarible is a comprehensive NFT issuance and trading platform built on Ethereum to create and sell digital collections protected by the blockchain. The platform is an open source, non-custodial platform for users to mint, sell and create collectibles. Rarible supports various types of NFT transactions such as Ethereum ERC721 and ERC155 standard encrypted artwork, game props, domain name services, etc. The platform is integrated with Opensea to support cross-platform management.
Release model:
Any user can enter Rarible to create and display their own artwork. The platform supports fixed-price transactions and auction transactions. The platform issued the governance token RARI in 2020 to encourage users to participate in token governance and work review.
Representative products: BoredApeYachtClub, ArtBlocks
Related fees:
Platform revenue comes from a 2.5% transaction fee. NFT creators can set royalties to a maximum of 50%, and the platform is currently working on a cross-platform royalty plan.
