NFT is a new phenomenon in the digital world. Part 1

Art in electronic impulse

Technological breakthroughs are made literally every day. Digital tools are increasingly penetrating human life, forcing them to reconsider their views and opinions on many issues.

One of the most popular objects today is NFT. Let’s consider in detail what it is, where it is applied, what weaknesses they have, and whether it is possible to make money on this technology.

Subject and algorithm

First, NFT is an acronym. It stands for Non Fungible Token, that is, a non-fungible token.
Non-fungible, because formally this token cannot be matched with an equivalent, which means that it cannot be replaced with anything. He is absolutely unique.

NFT technology — represents a specific part of the blockchain or blockchain. As you know, blockchain is needed to store data.

How it works: a network user commits a certain transaction, after which a new block is created in the chain, which is dedicated to this particular operation. After that, the block communicates with the rest of the chain to transfer information about the transaction.

In the chain of blocks, the authenticity of the new block is verified, and if the verification is successful, the block with information is added to the general chain. Upon completion of these actions, the transaction is considered completed, and the user can get his file if the transaction was, for example, a purchase.

Thus, this system can be compared to a ledger. Only all recorded information is stored on computers and servers of users who are mining.
It can be concluded that the NFT token is a kind of digital certificate that represents a unique object.

The certificate provides a unique right to any product. This token will contain all the necessary information about a digital product. Anything can be a product — video or audio materials, an image.

Tokens are stored in the public domain of the blockchain, so information about the product, its owner, as well as the history of operations performed with the product for all time will always be open.

Summing up, we can say that NFT token technology allows you to transfer to the blockchain or tokenize any product, even one that is outside of digital technologies. However, it is with digital goods that it is easiest to do tokenization.

What exactly can be transferred to the blockchain:
· digital art — paintings, photographs, videos, music
· game items: characters and weapons
· any items within the virtual universes

Application of non-standard tokens

As we have already found out, NFT token technologies allow users to own any digital product, make it possible to buy and sell, or use it on their own. Therefore, tokens are useful to anyone who wants to become the owner of any digital information.

In addition, tokens allow real and potential buyers to financially support their favorite artists or content creators.
Everything does not end with just owning a media product, the lucky owner can post it on blogs and social networks, and also use it as his avatars.

We will look at the use of technology in digital art, games, virtual universes, and also see what can be collected using blockchain certificates.

NTF For games

NFT technologies have recently captured the gaming industry and in their own way affect its development.
In the gaming industry, tokens are used when making purchases within the game so that the player can confirm his possession of achievements: weapons, all kinds of modifications, characters, skins and buildings.

The mechanism allows players to transfer in-game items between their accounts, as well as resell them. It is important to understand that the player has no rights to this item, all copyrights are reserved by the developer. However, the token confirms the fact of ownership of the item by a particular player within the game.

In addition to making transactions using technology, NFT games on the blockchain are gaining popularity today.

These games allow you to make money.

The game provides users with the ownership of any game add-on, which can be purchased in 3 main ways:
1) by creating or displaying a new character
2) by purchasing virtual items from marketplaces
3) you can unlock or earn this add-on

All three methods allow the player to obtain individual ownership of it, which can subsequently be exchanged, sold and bought, making a profit from this in the form of cryptocurrency.

There are NFT games that you don’t need to invest in to make money. These games are also called Play-to-Earn. The game participant receives his reward in the form of NFT or token, the amount of the reward increases in proportion to the time spent in the game.

You can make money in such games not only by playing it for some time, but also by purchasing and selling all kinds of game items in the relevant markets, auctions and exchanges. In such games, the value of achievements is determined, as a rule, by two factors: the degree of their usefulness in the game, or their exclusivity and significance for game collectors.

The indisputable advantage will be that you can not only take your leisure time with games, but also earn money.
However, there is also a significant drawback associated with investing in a game. Since earnings in such games are provided in virtual currency, there is always a high risk of losing your funds.

This is because NFT volatility cannot be foreseen in advance — it depends on changes in the market. You need to make a lot of effort and time, as well as have analytical thinking, in order to calculate in advance the least profitable offer of the market, in which it is not worth investing in any case!

It is difficult to give an unambiguous answer to this question about the prospects for NFT in games, because, like everything involved in the crypto world, games are very unstable neither in their functionality nor in reputation.

With a positive development of events, game developers are given a unique opportunity to create an in-game ecosystem with its own economy, which will subsequently bring considerable profit to both themselves and users.

On the other side of the scale, the instability of NFT in the world of games — user interest can disappear as quickly as it arises. The value of tokens for players looks very vague, moreover, it is not yet clear in what directions the development of this area will be carried out.

It cannot be ruled out that users will simply be disappointed in the industry and it will lose its popularity.

In the next part we will consider the application of NFT in art, creation of micro-universes, and for collecting.

Keep for updates.

FinTech — present and future

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NFT is a new phenomenon in the digital world. Part 1 was originally published in DataDrivenInvestor on Medium, where people are continuing the conversation by highlighting and responding to this story.