What are Non-Fungible Tokens (NFT)?
A non-fungible token refers to an unique cryptographic token, which stands for something distinct. One key feature of Non-Fungible Tokens (NFTs) that stands out is that it’s not exchangeable with another NFT.
In essence, fungibility is the attribute of a given item where its single units can interchange and where you can never tell one unit from another. Cryptocurrency tokens like Litecoin (LTC) precisely exhibit fungible qualities. One unit of LTC is equivalent to any other single unit of LTC. If you transfer one LTC and get one LTC in return, you cannot tell the difference.
Cryptocurrency tokens represent the largest number of fungible tokens. However, some cryptocurrencies are non-fungible in that they are intrinsically distinct, one from another. Additionally, they cannot interchange.
Contrast between Fungible and Non-Fungible Tokens
NFTs have unique attributes that render them distinct and digitally scarce. The fundamental programming of the non-fungible tokens is the Ethereum ERC-721 standard. One ERC-721 token has specific information, and one differs from the other in its degree of scarcity.
On the other hand, fungible tokens follow the ERC-20 standard, and it’s possible to exchange them with others. Tokens hosted on the Ethereum blockchain offer a good example.
It’s possible to divide fungible tokens into smaller units. For instance, you can transfer a fraction of an ERC-20 based token like Ether, Ethereum’s native currency. On the contrary, ERC-721 tokens bear the unique characteristic of indivisibility. In the way of example, no one wants a baseball card cut into halves. It loses its value.
Examples of Non-Fungible Tokens
CryptoKitties is a blockchain platform game where digital cats instead of normal cats breed and give birth to kitties where some end up becoming more scarce than others.
The distinct attributes of each CryptoKitty make them non-fungible. Just like an ordinary kitten, CryptoKitties remain indivisible into smaller units. The distinctive qualities of every CryptoKitty arise from its virtual pedigree and end up classifying each into its value class.
Decentraland has the hallmarks of a gaming platform. Those who engage with the platform’s operations can buy pieces of virtual land. Interestingly, some intangible land pieces, just like the usual pieces of land, occur in more valuable areas. Gamers can earn money from their pieces of land by developing them through art and trading them for profit.
My Crypto Heroes
My Crypto Heroes, just like Decentraland, assumes the form of a gaming program. However, unlike Decentraland, it’s a battle game hosted on the Ethereum blockchain.
The contesters, named “heroes,” are indeed non-fungible tokens that engage in warfare and competitions.
Apart from making collectibles, non-fungible tokens could prove very useful in solving real life challenges. NFTs could change our lives by giving us better control over our data.
Since non-fungible tokens can symbolize an item distinctly, they could prove useful in storing crucial data like academic qualifications, death certificates, warranties, medical reports, title deeds, or even identities. With the concept of non-fungible tokens, these tangible assets could exist in digitalized forms stored in wallets protected from alteration and forgery by passwords.
NFTs could define the changes in the gaming arena or, better still, the property business.