23 February 2022
One of the most important inventions of the 21st century so far is blockchain technology. Although the invention of blockchain is often credited to Satoshi Nakamoto, the inventor of Bitcoin in 2008, the concept actually originated in 1991. Two research scientists, Stuart Haber and W. Scott Stornetta were working on a project to improve the integrity of document authentication.
The problem was that you could never be absolutely certain that the document you were looking at was the latest legitimate version and that it had not been altered in some way. The answer was quite simple. If a document was timestamped it could always be proven to have existed in that form at that time. Any alteration would carry a different timestamp.
This timestamping concept was later refined by the introduction of the distributed ledger concept. Simply put, distributed ledger technology involves sharing data across a network of independent computers. The data is simultaneously visible to all interested users and ensures the authenticity and integrity thereof. It is this quality that makes blockchain the perfect foundation for the Non-Fungible Token (NFT).
The term non-fungible refers to something that is unique and cannot be replaced or exchanged on alike for like basis. Take a US Dollar bill for example. Swapping one with someone else results in you getting exactly the same thing back. It may be a different piece of paper, but it has exactly the same appearance and value. That is a fungible item. It is exchangeable like for like.
An original, one-of-a-kind work of art would be non-fungible because there is only one original version of it in existence. And, so would an original sports trading card or a photograph. No two are alike – even if only the tiniest detail differs. An NFT is irrefutably unique and genuine and that is where its value lies.
The token aspect of an NFT is the digitization of something on a blockchain and creating something that can be transferred from one person to another. The token is a collection of data on a blockchain. It contains the entire history of the token from its creation to the current state. We will look at how NFT minting works a little later.
To some, it may feel like such a long time ago, but the NFT idea began as recently as 2012 with the emergence of the theory of colored coins. The application of colored coins to serve a special purpose was advanced later that year. The principal thought was that, by adding some additional data, a coin could be made to represent something specific.
Early thinking was that these colored coins would provide the credentials for ownership of the real estate, stocks, and bonds or, in fact, almost any asset with a tangible value. What did happen, though, is that NFTs found favor in the form that we have come to know them – as in-game assets, digital art and collectibles.
Digital artist Kevin McCoy is reputed to have created the first NFT. This was in May 2014. Also in 2014, a blockchain-based peer-to-peer platform called Counterparty was launched. In 2015 and 2016 several game creators partnered with Counterparty to issue in-game asset token and trading cards. In the next five years, this market has exploded. The current NFT market has millions of assets in circulation and generates billions of dollars in sales annually.
Creating, or minting an NFT involves a few steps, but it's not at all difficult.
Note that when you mint an NFT, you generate a new block of data on the underlying blockchain. This requires energy that has to be paid for. On the Ethereum blockchain, this is called Gas. Every new NFT attracts this charge. Fortunately, the charge becomes payable only once the NFT is sold. You can, therefore, include the charge in the selling price and not incur the cost yourself.
NFTs can be sold on numerous exchanges and dedicated project-specific platforms. A few of the most popular exchanges are:
Axie Infinity is the most popular project. With around two million active daily players, cumulative sales since launching have surpassed $2 billion. CryptoPunks follows with cumulative sales of more than $1 billion and a record price of $23.7 million for a single NFT.
Other very popular projects include Bored Ape Yacht Club which is also a limited collection of 10,000 unique characters. The same developers also launched a 20,000-strong collection known as the Mutant Ape Yacht Club. Both these collections have recorded sales running into the millions.
Nexthash, through its NexInter exchange, is a multi-functional platform dealing in a variety of blockchain-based products. Nexthash will guide you in how NFT minting works and help you customize your collection. In addition to an NFT trading exchange, Nexthash also provides trading opportunities in a range of crypto and fiat currencies, making it the only blockchain partner you will ever need.