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Non-fungible token

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File:NFT Icon.png
NFT Icon

A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable.[1] This is in contrast to cryptocurrencies like bitcoin, and many network or utility tokens that are fungible in nature.[2]

Applications

Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership, and the possibility of asset interoperability across multiple platforms.[3] NFTs are used in several specific applications that require unique digital items like crypto art, crypto-collectibles and crypto-gaming.

File:Log cabin and horse on Etheria (picture of a screen).jpg
NFTs (tiles) within the Etheria virtual world and structures built on them.

The first NFTs were deployed to the Ethereum blockchain on October 21st, 2015 with the Etheria.world project.[4] The world consisted of a 33x33 map of purchasable and tradeable tiles which could be built upon with colorable LEGO-like bricks. A live demonstration of tile purchasing, brick farming and structure building was performed by its creator at DEVCON1 on November 13th, 2015.[5]

Art was an early use case for blockchain. NFTs prove authenticity and ownership of digital art.[6] The launch of CryptoPunks In June 2017 paved the way for "rare" art on the Ethereum Blockchain.[7] DADA.art built from the CryptoPunks model and launched the first marketplace for rare digital art in Oct 2017.[8]

Later, popular blockchain games like CryptoKitties made use of non-fungible tokens on the Ethereum blockchain.[9] NFTs are used to represent in-game assets, and are controlled by the user, instead of the game developer.[10] This lets the assets be traded on third-party marketplaces without permission from the game developer.

Standards

Specific token standards have been created to support the use of a blockchain in gaming. These include the ERC-721 standard of CryptoKitties, and the more recent ERC-1155 standard.[citation needed]

ERC-721 Standard

ERC721 was the first standard for representing non-fungible digital assets. ERC721 is an inheritable Solidity smart contract standard, meaning that developers can easily create new ERC721-compliant contracts by importing it from the OpenZeppelin library.[citation needed]

ERC-1155 Standard

ERC1155, brings the idea of semi-fungibility to the NFT world as well as it provides a superset of ERC721 functionality, meaning that an ERC721 asset could be built using ERC1155.[citation needed]

Growth and mainstream appeal

Non-fungible tokens first became popular when CryptoKitties went viral[11][12] and subsequently raised a $12.5 million investment.[13] RareBits, a Non-Fungible Token marketplace and exchange, raised a $6 million investment.[14] Gamedex, a collectible cards game platform made possible by NFTs, raised a $800,000 seed round.[15] Decentraland, a blockchain-based virtual world, raised $26 million in an initial coin offering,[16] and had a $20 million internal economy as of September 2018.[17] Nike holds a patent for its blockchain-based NFT-sneakers called ‘CryptoKicks’.[18]

References

  1. ^ Merriam Webster Definition
  2. ^ Schroeder, Stan. "Crypto trading card game 'Gods Unchained' looks pretty sweet in first gameplay trailer". Mashable. Retrieved 2018-11-18.
  3. ^ "Enjin is Creating a Real-Life Ready Player One, and It's Powered by Blockchain". VentureBeat. 2019-04-16. Retrieved 2019-08-14.
  4. ^ etherscan.io. "Ethereum Transaction Hash (Txhash) Details | Etherscan". Ethereum (ETH) Blockchain Explorer. Retrieved 2021-02-22.
  5. ^ "Ethereum DevCon1: Expert View of the Fifth Day". Cointelegraph. Retrieved 2021-02-22.
  6. ^ "The Art World Needs Blockchain – Irish Tech News". irishtechnews.ie. Retrieved 2018-05-02.
  7. ^ "how cryptopunks creators charmed the art world and paved the way for blockchain art". Breaker. 2019-01-19.
  8. ^ "the blockchain art market is here". Artnome. 2017-12-17.
  9. ^ Wong, Joon Ian. "The Ethereum world is now obsessed with breeding cartoon cats". Quartz. Retrieved 2018-05-02.
  10. ^ "CryptoKitties shows everything can — and will — be tokenized". VentureBeat. 2017-12-04. Retrieved 2018-05-02.
  11. ^ Wong, Joon Ian. "CryptoKitties is jamming up the ethereum network". Quartz. Retrieved 2018-05-10.
  12. ^ "CryptoKitties Mania Overwhelms Ethereum Network's Processing". Bloomberg.com. 2017-12-04. Retrieved 2018-05-10.
  13. ^ "CryptoKitties raises $12M from Andreessen Horowitz and Union Square Ventures – TechCrunch". techcrunch.com. Retrieved 2018-05-07.
  14. ^ "Crypto-collectibles and Kitties marketplace Rare Bits raises $6M – TechCrunch". techcrunch.com. Retrieved 2018-05-07.
  15. ^ "Blockchain startup Gamedex raises $0.8 million seed round to build platform for digital collectible card games like Pokemon – TechStartups". techstartups.com. Retrieved 2018-05-07.
  16. ^ Russo, Camilla (2018-06-12). "Making a Killing in Virtual Real Estate". Bloomberg. Retrieved 2018-09-05.
  17. ^ Hankin, Aaron (2018-09-04). "People are making more than 500% buying property that doesn't actually exist". MarketWatch. Retrieved 2018-09-05.
  18. ^ Beedham, Matthew (2019-12-10). "Nike now holds patent for blockchain-based sneakers called 'CryptoKicks'". Hard Fork | The Next Web. Retrieved 2020-12-23.
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