Non-fungible token

From Simple English Wikipedia, the free encyclopedia
An illustration of a non-fungible token (NFT) as a piece of code. This piece of code contains a list of parameters and all files linked to the NFT. These parameters contain important information that identify the NFT.

A non-fungible token (NFT) is a way of proving that a digital item is the only one of its kind in existence and therefore cannot be copied or reproduced without the owner's knowledge and consent.[1] They can be thought of as a digital certificate of authenticity. NFTs are considered modern-day collectibles by some people[by whom?]. They're bought and sold online, and represent digital proof of ownership of any given item. NFTs are securely recorded on a blockchain.[2]

Technology[change | change source]

NFTs use the same blockchain technology used by cryptocurrencies like Bitcoin to keep a ledger, a permanent record of all tokens, and who owns them. Each entry is unique. In the beginning, NFT used standard ERC-721, which was the first standard for non-fungible digital assets.[3] ERC-1155 brought the idea of ​​semi-fungibility to the NFT world and also provides an extended feature set for ERC-721,[4] which means that an ERC-721 asset can be built using ERC-1155.[5]

Usage[change | change source]

On October 10, 2022, a lawyer specializing in trademarks revealed that Formula One application for eight F1 trademarks covering marketplaces for cryptocurrency plus NFTs[6]

They differ from fungible tokens used in cryptocurrencies, which are exactly the same as each other and, therefore, can be used as a way of doing trade just as if they were money.[7]

Criticism[change | change source]

NFTs have been criticized for their high energy cost and high carbon footprint, mainly because of how these tokens complete blockchain transactions. Many people also criticize that NFTs can often be used for art scams.[8] The structure of NFTs attracts new investors, which allows them to exploit those who can invest on the same product later, an example of a Ponzi scheme.[9] People make lots of jokes about NFTs, most commonly "screenshotting" an NFT to get it for "free".

References[change | change source]

  1. "Non-fungible tokens aren't a harmless digital fad – they're a disaster for our planet | Adam Greenfield". the Guardian. 2021-05-29. Retrieved 2021-06-02.
  2. "Where's the Future of NFT Headed?". Retrieved 2021-10-12.{{cite web}}: CS1 maint: url-status (link)
  3. "EIP-721: Non-Fungible Token Standard". Ethereum Improvement Proposals. Retrieved 2022-02-25.
  4. "NFT Marketplace Software Development | NFT Development Services". Merkeleon. Retrieved 2022-02-25.
  5. "EIP-1155: Multi Token Standard". Ethereum Improvement Proposals. Retrieved 2022-02-25.
  6. "Formula One is reportedly applying for a 'F1' trademark, which could be used in NFTs or in the Metaverse". The Post W3B. October 13, 2022. p. 1.
  7. Sharma, Rakesh. "Non-Fungible Token (NFT)". Investopedia. Retrieved 2021-06-02.{{cite web}}: CS1 maint: url-status (link)
  8. Genç, Ekin (October 5, 2021). "Investors Spent Millions on 'Evolved Apes' NFTs. Then They Got Scammed". Vice Media. Retrieved November 9, 2021.{{cite web}}: CS1 maint: url-status (link)
  9. Kelly, Jemima (5 January 2022). "Matt Damon's crypto ad is more than just cringeworthy". Financial Times. Retrieved 26 January 2022.