What is NFT and why is it important?

Original title: "What is NFT in a Paper and Why Is It Important?"

Original author: Notes of Blue Fox

The NFT market is still small and not getting enough attention. But NFT is likely to explode in the next few years as its value is discovered.

The NFT market is starting to get a lot of attention in the area of encryption, starting with crypto cats.

(The most Expensive Cryptokitties Dragon, Source: Cryptokitties)

The cat above is the most expensive cat in NFT history. It is called DRAGON and was born on August 19, 2018. The transaction price is 600ETH, which is about 170,000 US dollars according to the market price at that time, exceeding 1 million RMB, and it breaks the previous Founder CAT's 300ETH price (the market price at that time was 110,000 US dollars).

(Formerly the most expensive cryptographic cat whose record was broken FounderCAT, Source: Cryptokitties)

So how do you understand NFT, and what is it worth? Why is it important?

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First of all, what is NFT? & have spent

The abbreviation of NFT is Non - Fungible Tokens, means not swap Tokens, it is relative to the interchangeable Tokens. Non-interchangeable tokens are also called non-homogeneous tokens. What are interchangeable tokens? For example, BTC, ETH these tokens are homogeneous tokens, so they are interchangeable, that is to say, your ETH and my ETH are essentially the same, with the same attributes and price. And non-interchangeable tokens, or non-homogeneous tokens, they're unique, they're like works of art, they're all different. They cannot be replaced with each other, so they are called non-interchangeable tokens or non-homogeneous tokens.

In general, NFT is unique, scarce, and indivisible. It can't be divided into 0.01BTC like BTC, it exists as a whole. However, the NFT itself can be coinized, but that's a different topic, and I'm not going to do that here.

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Second, where does NFT primarily exist in encryption? & have spent

Games, art, domain names, collectibles, virtual assets, real assets, identity and other aspects of NFT applications. At present, the most rapid development is the game, art and domain name. Here is a brief introduction to THE NFT in the field of games and art.

The NFT cryptographic game domain has a natural relationship with NFT. One of the biggest problems in the current game field is that equipment and items cannot be transferred, and cannot be truly owned by users. NFT is a blockchain-based private property, which is completely controlled by users and can be transferred and traded freely.

In encryption games, Axie Infinity, Centre and, Gods Unchained, Cryptovoxel and many other games are continuously expanding the market.

1) The NFT trading market has begun to take shape

* Currently, the NFT trading market Open Sea has more than 20,000 users.

(More than 20,000 Opensea users, Source: DUNEANALYTICS)

Opensea, the NFT market exchange, has more than 20,000 users, second only to Uniswap, Kyber and Compound and ahead of makers, 0x and others in the hot DeFi space. This is a big user.

* The volume of trading on Opensea is also considerable.

On Opensea, there were 706 NFT projects, 285 projects with 1ETH trading volume, 59 projects with 100ETH trading volume, and 24 projects with 1000ETH trading volume. Encrypted cats and Centre and at the top have tens of thousands of ETH transactions.

(NFT Total Trading Volume Ranking on Opensea, Source: Opensea)

In addition to the data on the Opensea, we can see from the nonfungible, NFT the total volume of more than $100 million, transaction number more than 4.7 million times, projects of more than $1 million accumulated trading more than 16.

(NFT total turnover more than $100 million, the Source: NONFUNGIBLE)

2) The value of NFT in encryption games

Why is NFT growing fastest in games? NFT in the game has natural uniqueness and usability. For example, Axie in Axie Infinity each has a different attribute. Axie is a fantasy creature that players can use to fight, collect, and cultivate. The different properties determine the different roles of Axie in the battle. Axie has six body parts: eyes, ears, horns, mouth, back and tail. The corners, mouth, back, and tail determine which CARDS the Axie can play in battle. It has a state of health, morale, skill, and speed. Each Axie also has a different type. Each type is stronger or weaker than the others.

(Axie has different attributes and body parts, Source: Axie Infinity)

In addition to fighting, the Axie, as a fantasy creature, can also breed and produce offspring. Parenting can also be used to fight battles, or to continue to produce offspring (up to 7). To produce offspring, Axie costs some ETH or SLP tokens, which are interchangeable, homogeneous tokens. In addition to buying on the open market, it can also be obtained by playing in the game environment. This has led to a new model of blockchain gaming: making money by playing games, because the SLPS earned can be sold on the open market. This pattern also increases the demand for NFT (Axie). SLP passed the 4chan Meme a few days ago, which led to its rapid rise and attracted people's attention.

If Axie Infintiy gains a larger audience, then the value of the scarce Axie will be greater, and it shouldn't be a surprise if some axies sell for more than $100,000 each in the future. Of course, this will also drive demand for SLPS.

(Recently sold Axie, Source: Axie Inifinity)

Beyond Axie Infinity, there are many more cryptographic games on the road that need to be explored.

* NFT in digital art

In the Superrare digital art market alone, artists have earned more than $1 million, releasing more than 7,000 NFT artworks in 178 countries.

(Artists on Superrare earn over $1 million, Source: Superrare)

Why is NFT in digital art valuable?

NFT in the game field is relatively easy to feel due to its use value and scarcity. But NFT in the digital art market is relatively hard to understand. Even so, digital art has sold more than $1 million on Superrare alone.

So, how to understand the NFT in digital art? Why might it be valuable in the future, even hopefully alongside the NFT in gaming?

From a macro perspective, the NFT market for digital art is likely to catch up with or even surpass the traditional physical art market in the future. The most important determinant is, what is the key to artistic value? The real thing. In the art market, authenticity is at the heart of value. Even a 99.999999 per cent imitation is of little value if it is not an original. There is, of course, a more central question, about the valuation of the value of the art itself, which is a larger subject that we will not explore for the time being.

We see a lot of pictures from Superrare, some digital art pictures are priced in the hundreds, thousands, even tens of thousands of dollars. What is the value of these digital art works? People buy physical works of art, such as paintings, which can be appreciated and displayed. And digital art is just an image file, where is the value? The question is not whether it can be appreciated or displayed, because a fake has the same effect, and the average person may not know the difference between a fake and the real thing. But the real thing has value, the fake has no value. People can imitate Van Gogh's "Sunflower" and create works that are almost indistishable to the naked eye. Fakes can still be appreciated and displayed, but this "Sunflower" has no great value.

Artists in the traditional physical world sign their names to show the real thing. In order to identify the true and false, it requires the participation of experts and costs a lot of money. On a digital art vehicle like NFT, there is no such problem.

Because you can't fake NFT. In the physical world, it has the potential for forgery, but in the NFT, it cannot be tampered with. In this way, the digital work of any artist, as long as it exists in NFT form, is unique. Even the creator himself cannot tamper with and copy it. It has a unique scarcity.

Of course, in the end, NFT is only the carrier, and the core is the discovery of the artistic value behind it, which is the ultimate factor determining the NFT of digital art. But we don't have to worry about this, because each era has its own art carrier, in the long run, as the digital native generation for digital art, as artists to create more digital art (NFT), a new generation will create belong to the generation of "" sunflower", "art collection in the future is likely to be the focus to NFT.

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(Selling Digital art at Superrare, Source: Superrare)

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NFT investment & NBSP;

NFT's own investments are more like those in collectibles. Therefore, in terms of NFT investment, in-depth understanding of specific NFT market segments is required to make a good investment, which is especially suitable for enthusiasts. One is to enter early, the second is to participate in the game, digital art collections, domain names and other markets, deep into the market demand. There are many factors involved in the valuation of NFT. Blue Fox Notes also published a related article "How to value Virtual Assets? .

In addition to the NFT itself, the project carrying NFT is also an important part of THE NFT investment. Compared with the NFT itself, the project carrying NFT has a better chance to capture the value of the entire ecological development. Of course, this also depends on the economic mechanism design of the project token. Blue Fox Notes will continue to focus on these types of projects.

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