What Are NFTs?
Updated: Jun 11, 2019
As the world is moving on, an NFT (ERC-721 token) presents as a new form of uniqueness and authenticity in the age of Blockchain.
The difference between ‘fungible’ and ‘non-fungible’
Instead of suffocating ourselves in the most complex sentences of what non-fungible tokens (NFTs) are, it’s worth starting from the basics as the difference between 'fungible' and 'non-fungible' assets in the offline world.
When something is fungible, in case a token, it can be replaced by something identical. The $10 bill in your pocket is just as valuable as the $10 bill I have in my Gucci bag. If we use them to buy goods from the convenience store, the shop owner will accept them equally, even if mine was printed in 2018 and yours in 1980. If you lend $20 to someone, it wouldn’t matter if they didn’t return the exact same one, old or new, from their mom or Mary Jane, those $20 bills have the same value. Most currencies prefer fungibility to maintain standard value and uniform acceptance. Fungibility is essential to any currency, from US Dollars to Bitcoin or Ether.
However, tokens in a blockchain can be more than just currencies. That explains the existence of unique collectibles in means of non-fungible tokens. Non-fungible tokens are digital assets that are designed to not be equal. When something is non-fungible, it will have unique information or attributes that make them irreplaceable or impossible to interchange, be it the Mona Lisa painting or simply a plane ticket. Although all plane tickets look the same, each of them carries different passenger names, destinations, seat numbers and departure times. Imagine mistaking your ticket with someone else’s, things could end up two ways: airport security wouldn’t let you get into the plane or you would have to buy another ticket with your valid identification.
ERC-721: The standard of non-fungible uniqueness
Many of non-fungible tokens on a blockchain are built using the ERC-721 standards to chronicle an asset’s ownership, approval, transfer and of course the asset’s metadata, since the popular Ethereum standard ERC-20 could cover only a few of the asset’s attributes.
An NFT (ERC-712 token) can digitize assets that are unique pieces. These NFTs can be compared to the baseball cards, as each has unique information and varying levels of scarcity. The more information you have about your assets, the more valuable it is. Classic and vintage cards are exclusively valuable if you are possible to trace it back to its production date.
In 2016, a story of the most famous and valuable baseball card in the world continues to be written. Regarded as the Holy Grail of baseball cards, the T206 Honus Wagner issued in 1909, was sold for $3.12 million through Goldin Auctions, setting a new world record price for a sports card.
However, these small, valuable and fragile sports cards require efforts to keep them safe and make sure every trace of its history is recorded. What is better than storing these collectibles as non-fungible tokens on a blockchain, or even in your own wallet, which is more secure and verifiable?
ERC-721 token standard codifies the creation of a non-fungible token and navigates developers to create decentralized apps (Dapps) that could serve basically any field where trackability and authenticity are issued within smart contracts.
A standard exists to make sure tokens play nice with one another and with the Ethereum network, especially when it comes to transfers and exchanges in NFT Markets. The creations of ERC-721 tokens and Dapps have revolutionized the games industry over the past few years with a major influx of digital collectibles and in-game assets.
In case of the sports cards collecting field, when a buyer or collector finds a unique insert in the set, they could trace and verify its origin directly with the issuer using a smart contract, without having to rely on a third party authentication institution. In a blockchain, the authenticity of a sports card in the form of an ERC-721 token could be traced with the card’s manufacturer creating a digital imprint of each card issued.
One early pioneer of non-fungible tokens was Cryptokitties, a blockchain-based game where players have the opportunity to collect and breed their digital cats. Every cat, in the form of an ERC-721 token, has a different appearance and personality that make them unique and irreplaceable, the same happens in the offline world. Cryptokitties can be bought and sold using Ethereum through NFT Markets. Some kitties are more valuable than others depending on the scarcity of these NFTs. As recorded, the most expensive Cryptokitty was sold for $120,000.
Another Dapp Games in the digital collecting field is Gods Unchained, the fantasy-themed trading card game. The game uses the ERC-721 standard to create cards in forms of NFT tokens. A total of 380 unique cards are available in the Genesis Season for you to collect. Some of the most played and sought-after cards are widely expected to be Rares and Epics, you will be able to trade your duplicates for great value in the secondary markets. The Blockchain-based game has captivated the attention from the giant Coinbase Ventures, who participated in a $2.4 million of seed funding. While the game has yet to launch, Gods Unchained has earned a notable record as a Crypto trading card in this Ethereum-based game was sold at auction for 146 Ethers, worth more than $60,000 at that time.
In fact, whilst the traditional gaming is just about fun experiences, Dapp games balance compelling gameplays with the new economics via blockchain. Many early adopters of blockchain gaming has viewed this opportunity as an investment since the value of those specific ERC-721 tokens will positively increase multiple times coupled with the growth of the games. In some popular Dapp games, these tokens could value hundreds of thousands dollars.
As the world is moving on, there are many possibilities of non-fungible tokens that could be used beyond collectibles. Birth certificates, academic credentials, warranties, and identities - even artwork and property ownership could become more secured and immutable under the form of NFTs.
HB NFT Marketplace
This May, the all-in Ethereum wallet - HB Wallet, has announced the launch of HB NFT Market, becoming the first wallet to include this amazing feature within their platform. That means HB communities can have an opportunity to experience any Dapp Games built on the Ethereum blockchain, as well as selling and buying their desired NFT assets (ERC-721 tokens) directly on the HB marketplace.
The new NFT function integrated with HB Chat also enables users to send and receive NFT assets instantly while chatting. Accordingly, two parties can even negotiate, place a request using a smart contract to codify their transactions. HB Wallet is validated as the first Ethereum wallet in the world to materialize those abilities.