NFT, or Non-Fungible Token, is a digital asset based on blockchain technology that is unique and irreplaceable. Each NFT has a unique identifier and cannot be exchanged with other NFTs. This feature makes NFTs widely used in digital art, games, virtual real estate and other fields.

The technological foundation of NFTs lies in blockchain and smart contracts, which ensure the uniqueness and security of NFTs. the history of NFTs can be traced back to colored coins in 2012, but it was CryptoKitties in 2017 that really garnered a lot of attention. as the market evolves, standardization (e.g., ERC-721 and ERC-1155) and interoperability of NFTs are also become increasingly important, allowing it to play a role in the wider ecosystem.What is NFT (Non-Formalized Token)

Basic Concepts and Definitions of NFT

NFT, the full name isNon-Homogenized Tokens（Non-Fungible Token (NFT) is a digital asset that exists on the blockchain. Unlike homogenized tokens such as Bitcoin or Ether, NFTs are unique and irreplaceable. This means that each NFT is unique and cannot be exchanged with other NFTs.

Definitions and Characteristics

NFT is a digital asset based on blockchain technology and its key features include:

• Uniqueness:Each NFT has a unique identifier that ensures its irreplaceability.
• Indivisibility:Most NFTs cannot be divided into smaller units and must be traded as a whole.
• Ownability:Owners can prove their ownership of the NFT through blockchain technology.
• Transferability:NFT can be bought, sold and traded on different markets and platforms.

Technical Fundamentals

Most NFTs are based on the Ethernet blockchain and are implemented using the ERC-721 or ERC-1155 standards. These standards define the basic attributes and functionality of NFTs, allowing them to be interoperable between different applications and platforms.

Comparison of ERC-721 and ERC-1155

characterization	ERC-721	ERC-1155
uniqueness	Each token is unique.	Can be unique or homogenized
Batch trading	unsupported	be in favor of
Scope of Application	Mainly used for single assets	Suitable for a wide range of assets

Historical Background

The concept of NFT can be traced back as far as 2012's 'Colored Coins', but it was 2017's CryptoKitties, an ethereum-based game that allowed users to buy, keep and trade virtual cats, that demonstrated the potential of NFT by triggering a large number of transactions in a short period of time.

Standardization and Interoperability

As the NFT market grows, standardization becomes increasingly important; ERC-721 and ERC-1155 are the most commonly used standards today, and these standards ensure interoperability between different platforms and applications, enabling NFTs to function in a wider ecosystem.

Principle of operation of NFT

NFT（The principle of operation of NFTs (non-identical tokens) is based on blockchain technology, which is a decentralized database technology. Each NFT is unique, which makes them different from traditional cryptocurrencies such as Bitcoin or Ether, which are interchangeable.

Blockchain technology

NFT relies on blockchain technology to ensure its uniqueness and security. Blockchain is a distributed ledger technology where each transaction is recorded in a public ledger, making it extremely difficult to tamper with the data. Each NFT contains unique identifiers that are stored on the blockchain, ensuring uniqueness and irreplaceability.

Intelligent Contract

NFTs are typically generated and traded throughIntelligent ContractSmart contracts are automated code deployed on the blockchain that automatically executes and validates transactions. Smart contracts are automated code deployed on the blockchain that automatically execute and validate transactions. These contracts ensure that the transfer of ownership of NFTs is transparent and secure, without the need for third-party intermediaries.

Metadata and Content

In addition to having a unique identifier, each NFT contains metadata about the token. Such metadata may include the name of the artifact, its description, information about its creator, and so on. In addition, NFTs are often linked to external digital assets, such as images, videos or audio files, which are stored in decentralized file systems such as IPFS (Interplanetary File System).

Casting and trading

The process of creating NFT is calledCastingIn the minting process. During the minting process, creators upload digital assets to the blockchain and generate a unique token. This process usually requires a fee, called a "fuel charge". Once an NFT is minted, it can be bought and sold on various NFT markets.

Markets and platforms

There are a number of specialized marketplaces and platforms that support the trading of NFTs, such as OpenSea, Rarible, and Foundation. These platforms provide a convenient interface for users to browse, buy, and sell NFTs. the transaction process requires buyers and sellers to make payments using a cryptocurrency, usually Ethereum (ETH).

In short, NFT operates on the principle of blockchain technology, ensuring its uniqueness and security through smart contracts and a decentralized file system. This gives NFT a unique position and potential in the field of digital assets.

What is NFT (Non-Formalized Token)

The difference between NFT and cryptocurrency

Before exploring the difference between NFTs (non-identical tokens) and cryptocurrencies, let's first understand the basic concepts of both. Cryptocurrencies, such as Bitcoin and Ether, are digital assets based on blockchain technology with ahomogenizationThis means that every Bitcoin or Ether is the same and has the same value and exchangeability. This means that every Bitcoin or Ether is identical, with the same value and exchangeability.

In contrast, NFTs (non-homogenized tokens) areUniqueEach NFT has its own unique identifier and metadata, which makes them non-interchangeable. Each NFT has its own unique identifier and metadata, which makes them non-interchangeable. This feature makes NFTs an important asset in the field of collectibles, art, and virtual goods.

Technical Fundamentals

Cryptocurrency and NFT are both based on blockchain technology, but they use different standards. Cryptocurrencies typically use the ERC-20 standard, while NFTs use the ERC-721 or ERC-1155 standards.

characterization	Encryption Currency	NFT
Standard	ERC-20	erc-721, erc-1155
homogenization	be	clogged
convertibility	high	Low

use

Cryptocurrencies are primarily used for transactions, payments and stored value. Their value is derived from market demand and supply and can be used to purchase goods and services. NFTs, on the other hand, are mainly used to represent ownership and authenticity. They are often used for digital artifacts, virtual real estate, in-game items, and more.

Market Value

The market value of cryptocurrencies is usually more affected by market volatility and the price fluctuates frequently. The value of NFT depends more on its rarity, uniqueness and the reputation of its creator. For example, a digital work by a well-known artist may fetch a high price in an auction.

Transactions

Cryptocurrencies are usually traded on various cryptocurrency exchanges, where the trading process is relatively simple and fast, while NFTs are usually traded on specialized NFT markets such as OpenSea, Rarible, etc. As each NFT is unique, it may require more verification and validation. Since each NFT is unique, the trading process may require more verification and validation.

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Applications of NFT

Applications of NFT

Art & Digital Collectibles

In the arts.NFT It has become a new form of creation and sale. Artists can sell their digital works, which can be digital paintings, music, movies, etc., by distributing NFTs. Due to the uniqueness and inseparability of NFTs, collectors can be assured that they own the only version of the original work.

gaming industry

In the game industry, NFT is used to represent virtual goods in games, such as characters, equipment, props, etc. These virtual goods can be traded or transferred between different games and even bought and sold in the secondary market, providing players with more interactive and investment opportunities. These virtual items can be traded or transferred between different games, and can even be bought and sold in the secondary market, providing players with more interactive and investment opportunities.

Virtual Real Estate

Virtual real estate is another popular NFT application. Users can buy and own land and buildings in virtual worlds, and these virtual properties can be built, rented or sold, and even host virtual events and exhibitions.

Music & Entertainment

Musicians and entertainment companies are also beginning to utilize NFTs to distribute music albums, concert tickets and other digital content. These NFTs can provide unique experiences such as exclusive concert passes, meet-and-greet opportunities, and more, bringing a greater sense of interaction and engagement to fans.

Authentication and Certificates

NFT can also be used for authentication and certificate issuance. For example, educational institutions can issue NFT certificates to prove a student's academic achievement and qualifications. These certificates are tamper-proof and permanently stored, ensuring their authenticity and credibility.

Copyright and Intellectual Property

In the area of copyright and intellectual property, the NFT can be used to track and manage the copyright of a work. Creators can prove ownership of their work through the NFT and can set up a royalty mechanism to ensure that every time a work is resold, the creator receives the appropriate revenue.

NFT's Impact on the Art World

NFT (Non-Formalized Token) has attracted widespread attention and change in the art world. This digital asset based on blockchain technology brings unprecedented opportunities and challenges for art creation and trading.

The Rise of Digital Art

With the emergence of NFT, digital artworks can be verified and traded through blockchain technology, which makes digital art no longer just an easily reproducible data file, but an asset with uniqueness and scarcity. This change has enabled many digital artists to display and sell their works through the NFT platform, thus gaining more recognition and income.

Artwork Ownership and Copyright

NFT technology makes ownership and copyright management of artworks more transparent and reliable. Each NFT contains the original creator, owner and transaction history of the artwork, which is recorded on the blockchain and cannot be tampered with. This not only protects the rights of artists, but also increases the trust of collectors.

market data

According to market data, the volume and value of NFT artwork has exploded in recent years. Here are some key statistics:

years	NFT Artifact Transactions (pieces)	Total transaction value (USD)
2019	1,000	3,000,000
2020	5,000	20,000,000
2021	50,000	1,000,000,000

Emerging Art Forms

The emergence of NFT has facilitated the development of many emerging art forms, including dynamic art, interactive art and virtual reality art. These new forms of artworks can be displayed and traded through the NFT platform, providing artists with more room for creation and expression.

Challenges in the Art World

Although NFT has brought many opportunities to the art world, it also faces some challenges. For example, the NFT market is highly volatile and prices are susceptible to speculation. In addition, the energy consumption of blockchain technology has raised environmental concerns. These issues need to be addressed in the future to promote the sustainable development of NFT in the art world.

NFT Market Trends and Future Prospects

Market Trends

In recent years.NFT The market is experiencing explosive growth. In 2021 in particular, NFT volumes reached unprecedented heights, thanks to a number of high-priced auction events and the participation of celebrities and artists. As more and more mainstream companies and brands enter the NFT space, market recognition and acceptance continues to grow.

Technology Development

As blockchain technology continues to advance, especially with the introduction of Ether 2.0, NFT creation and transactions will become more efficient and environmentally friendly. New blockchain platforms such as Flow and Binance Smart Chain are also providing lower cost and more efficient transaction options, which will further boost the NFT market.

Application Extension

In addition to artwork and collectibles, the application of NFT is rapidly expanding to music, games, virtual real estate and sports. For example, virtual items and characters in games can be bought and sold through NFT, bringing a whole new business model to the gaming economy. Musicians and athletes have also begun using NFT to distribute unique digital artwork and memorabilia.

Future Prospects

Looking ahead, NFT is expected to play an important role in many more areas. With the rise of the Metaverse, NFT will become a core technology for asset authentication and trading in the virtual world. This will create new business opportunities for the digital economy and promote the popularization of digital assets.

Legal & Regulatory

However, with the rapid growth of the NFT market, related legal and regulatory issues have become increasingly prominent. Governments and regulators are beginning to pay attention to the compliance and risk management of NFTs, and may introduce relevant laws and policies to regulate market behavior in the future, which will have a far-reaching impact on the long-term healthy development of the market.

Social Impact

In addition, the popularity of NFT will have a profound impact on society. It provides a new source of income for artists and creators, and changes the perception of ownership and value. As more people understand and embrace NFT, the technology will play an increasingly important role in the digital economy of the future.

Strengths and Challenges of NFT

Strengths

Uniqueness and Scarcity

Non-Formalized Token (NFT)One of the greatest strengths of theuniquenessandrarityEach NFT is unique, which makes them representative of real, scarce assets in the digital world. Each NFT is unique, which allows them to represent real and scarce assets in the digital world. This feature is especially valuable for artwork, collectibles, and other items that require proof of uniqueness.

Ownership and Copyright Protection

Another important advantage of NFT is the ability toClearly documented ownershipThrough blockchain technology, all changes to NFT's rights can be permanently recorded. Through blockchain technology, changes in ownership of NFTs can be permanently recorded, which helps copyright protection and prevents counterfeiting. This is especially important for digital artists and creators, as they can secure the copyright and revenue of their work through NFT.

Mobility and Market Expansion

Since NFTs can be bought and sold on the digital marketplace worldwide, they have highMobilityThis has enabled assets such as art, music and in-game items to be traded and circulated more easily. This allows assets such as artwork, music, and in-game items to be traded and circulated more easily, thus expanding the market and providing more opportunities for creators and investors.

Challenge

Technology threshold and popularity

Despite the great technical potential of NFT, itsTechnical thresholdremains a major barrier to popularization. For the average user, understanding and using blockchain technology may require a certain amount of learning costs, which limits the widespread adoption of NFT.

Environmental Impact

Since most NFTs rely on energy-intensive blockchain technologies (such as Ether), theirEnvironmental ImpactIt has become an issue of great concern. The large amount of energy consumed can have a negative impact on the environment, so how to reduce the carbon footprint of NFTs is an important challenge that needs to be addressed in the future.

Market Volatility and Investment Risk

NFT MarketsVolatilityThis means that prices may fluctuate significantly, which carries a higher investment risk. For investors, this requires careful consideration and risk management. In addition, the risk of overheating and bubbles in the market also requires attention.

Legal and Regulatory Issues

Since NFT is an emerging digital asset, itsLegal and regulatory frameworkIt has not yet been fully established. This may bring a series of legal risks, such as copyright disputes and tax issues. Governments and regulators need to formulate corresponding policies and laws to ensure the healthy development of the NFT market.

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NFT (Non-Formalized Token) FAQs

NFT (Non-Formalized Token) FAQs

What is NFT?

NFT, the full name isNon-Homogenized Tokens（Non-Fungible Token (NFT) is a digital asset that exists on the blockchain. Each NFT is unique and cannot be exchanged with other NFTs.

What is the difference between NFT and cryptocurrency?

Cryptocurrencies such as Bitcoin and Ether are homogenized and interchangeable, while NFTs are unique and non-interchangeable. Cryptocurrencies use the ERC-20 standard, while NFTs use the ERC-721 or ERC-1155 standards.

What are the ERC-721 and ERC-1155 standards?

ERC-721 and ERC-1155 are the standards used to create NFTs on the Ether blockchain. the ERC-721 standard is unique per token, while the ERC-1155 standard allows for the creation of tokens that can be either unique or homogenized.

How to create and trade NFT?

The process of creating NFT is calledCastingNFTs can be bought and sold on a variety of markets and platforms, such as OpenSea, Rarible, and others.

What are the applications of NFT?

NFT's applications include art and digital collectibles, the gaming industry, virtual real estate, music and entertainment, authentication and certificates, and copyright and intellectual property rights.

What is the impact of NFT in the art world?

NFT provides uniqueness and scarcity to digital artworks, changes the way artwork ownership and copyright management is managed, and facilitates the development of new art forms and markets.

What are the future trends in the NFT market?

The NFT market is expected to continue to grow with the advancement in blockchain technology and development of more application areas. The rise of metaverse will further promote the application of NFT in virtual world.

What are the advantages of NFT?

The main advantages of NFT include uniqueness and scarcity, ownership and copyright protection, mobility and market expansion.

What are the challenges facing NFT?

Challenges facing NFTs include technological thresholds, environmental impacts, market volatility and investment risks, as well as legal and regulatory issues.

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