What are NFTs (Non-Fungible Tokens)?
Cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) and fiat currencies like the dollar and the euro are fungible. You can have 1 ETH and exchange it for any other ETH, or you can exchange $100 for 100 any others.
In contrast, Non-Fungible Tokens or NFTs are tokens that represent information of unique or rare digital and real assets. This information is stored on each NFT on a 1-to-1 basis. An NFT cannot be divided into smaller parts like other cryptocurrencies or other traditional currencies (fiat). In a nutshell, NFTs are indivisible crypto assets that represent information and value of rare or unique items.
NFTs are relatively new types of digital assets designed to represent ownership of something that is unique and rare, be it physical assets, digital resources, stocks, or whatever.
Because each NFT is unique, cannot be replaced with another identical token, this property is known as non-fungible and is created by smart contracts that prevent copying while public blockchains confirm scarcity.
NFTs exist in various formats and vary depending on the standard they have been built on. For example, ERC 721 and ERC1155 are for Ethereum NFTs while TRC721 is for TRON. Each has its own advantages and limitations, which can affect the types of NFTs that can be created. The vast majority of NFTs currently rely on ERC721.
It’s still quite early as NFTs came to the fore in 2017 with a decentralized app (dApp) called CryptoKitties, where users exchanged and could collect virtual cats. The market jumped nearly 300% in 2020 to more than $250 million.
Ta NFTs can coincide in any category, but mostly they appear in the form of art, music, and as objects in blockchain-based video games.
Why are some Non-Fungible Tokens of great value?
As you may have already seen, some NFTs are of great value, with many NFTs touching over $100,000 on the market, including a purchase for a piece of virtual land in Decentraland for $215,000 in November 2018, and a rare CryptoKitty known as Dragon that sold for $600, then worth $170,000.
Since NFTs are unique and may differ in their rarity, desire, and usefulness, it can make it how special and sought-after an NFT is with collectors and merchants buying and selling NFTs, with their value determined by many factors.
Like many collectibles, NFTs are worth as much as some are willing to pay for it – which can be a hefty sum.
Receiving, storing and sending NFTs
NFTs just like cryptocurrencies are stored in compatible digital asset wallets. For Ethereum NFTs, MyEtherWallet is one of the most popular options as it can be used to easily manage any Ethereum-based NFT.
Like Ethereum and ERC20 tokens, it can be transferred from one address to another. But it is important to note that the commission is always paid in ETH, as NFT tokens are usually indivisible by nature and cannot be used as a gas fee.
MyEtherWallet has a complete guide to using it with NFTs where you find it in their NFT manager.