Non-fungible tokens can refer to several digital assets, some more common than others. In the real world, you can compare them to your collections (e.g., stamps, baseball cards, etc.).
What Is a Non-Fungible Token?
Non-fungible token or NFT for short is a virtual asset on a digital ledger or blockchain that represents unique tangible and intangible items. NFTs can range from collectible cards to digital real estate.
Unlike physical collectibles, though, non-fungible tokens have distinctive characteristics that make them different from others. These characteristics are easy to verify, making the creation and circulation of fake collectibles useless since each non-fungible token is traceable to its original maker.
You can’t exchange non-fungible tokens for another since each token is unique, even if they are on the same platform, game, or collection. Think of them as plane tickets. No one else can use your ticket because it has been issued under your name. So when you run out of money at the airport, you can’t just sell your ticket in exchange for money because the buyer won’t be able to use it.
But while non-fungible tokens can’t change hands directly, more and more of them are being created using one of two Ethereum token standards, which let software developers ensure they’re compatible with cryptocurrency exchanges and wallet services. Other cryptocurrency creators, including Eos, Neo, and Tron, also have their own non-fungible token standards to encourage developers to host their creations on the providers’ blockchain networks.
What Are Non-Fungible Tokens Used For?
Gamers own non-fungible tokens like in-game currency, casinos and theme parks in virtual worlds, character costumes, and avatars. Games known for using these tokens to represent digital property include Pokemon, CryptoPunks, The Sandbox, and Decentraland.
Artists’ digital artwork can be considered non-fungible tokens, too. Just recently, for example, Grimes sold $6 million worth of digital art as NFTs. Mad Dog Jones, Mike Shinoda of Linkin Park, and Fort Minor are also among the artists who use non-fungible tokens.
Cyber Cosmos is another example of an NFT. CCW NFT is a set of cryptocurrency NFT characters created to persuade women that STEM, blockchain and coding can become a career. The characters that users secure in the real world are effectively investment artworks and represent the author’s ethos of strength, fairness, and equal opportunities for women. Besides being able to get onboard the current trend of blockchain NFTs, these characters will also allow people to connect in the Metaverse, the virtual reality mentioned by Mark Zuckerberg and intended to supplant the Internet.
How Do You Create a Non-Fungible Token?
Each type of non-fungible token has its own setup process. But if you’re interested in setting up one for digital artwork, here’s a setup guide on an online marketplace like OpenSea:
- Create a digital wallet to store your non-fungible tokens and cryptocurrency in MetaMask is recommended.
- Create an OpenSea account. Click the profile icon on the top-right corner of the page and click My Profile.
- Click Sign in and follow the on-screen instructions to finish setting up your account.
- When that’s done, you should see your account page. Click Create on the top-right portion of the page and click My Collections.
- Under Create new collection, click Create and enter the collection’s details.
- Finalize your collection, click Add New Item. Upload its metadata and the image, video, or audio file you made. Give your non-fungible token a name.
- Click Create, and you’re done.
Now, list your collection for sale. Note that you need to pay an Ethereum blockchain transaction cost or gas fee when you sell something for the first time, though, before you can list anything.
Royalties can be programmed into digital artwork, so you get a percentage of sale profits each time your artwork is sold to a new owner.
Non-Fungible Tokens: Boon or Bane?
While non-fungible tokens do help artists make more money than going through a digital gallery to sell their work, their use has some unwanted repercussions, too. Even if these tokens can’t be duplicated without permission, there’s also no way to control who can make them in the first place. As such, some artists have found their work ending up under the “control” of people who had nothing to do with their creation.
Victims of art theft include Simon Stålenhag, a Swedish illustrator whose Tales from the Loop became an Amazon Prime original. He found one of his artworks turned into a “MarbleCard,” a kind of non-fungible token that lets users make and trade tokens that represent web pages.
Non-fungible tokens, as we’ve seen in this post, bring both good and bad. Like any other piece of advanced technology, they can be abused by enterprising cybercriminals who always strive to make a bang for other people’s buck.