With that being said, several other blockchain networks have since begun supporting NFTs – such as the Binance Smart Chain. In a nutshell, this specific sub-set of the Ethereum blockchain is ideal for NFTs, as each ERC-721 token is unique from the next. To date, many creators of NFTs prefer the Ethereum blockchain, not least because it supports ERC-721 tokens. Blockchain ProtocolĪll of the best NFT tokens are hosted on a blockchain protocol. Whether that’s a virtual painting, house, car, or sporting moment – NFTs allow you to store ownership in a digital manner. Naturally, and as we cover in more detail shortly, NFTs can represent pretty much anything that has perceived value. Once again, this is because each NFT can ve verified for its authenticity through a unique transaction hash.This means that the NFT is unique only to the respective painting and thus – it cannot be imitated or copied.The artist then decides to create an NFT, which represents the value of the said painting.Let’s say that an artist creates a new physical painting.This means that you cannot swap one NFT for another and expect to retain the same value – as each token is unique. However, as we have established, NFTs are non-fungible asset classes. And, this is also the same with virtually all of the cryptocurrencies in circulation today. This is because you still have a total of $20 at your disposalĪs per the above example, cold-cash cash is a fungible asset class.Ultimately, although you now have different notes from your original $20 bill, nothing has changed in terms of value.In turn, you are given a $10 bill, $5 bill, and 5 x $ 1 bills.As such, you ask somebody to swap your $20 bill into small denominations.Let’s suppose that you have a $20 bill, but you need some change for the vending machine – which only accepts $1 bills. In a nutshell, the physical dollars and cents that we use every day to make purchases are fungible. Fungible vs Non-FungibleĪlthough we briefly explained the difference between fungible and non-fungible tokens in the section above, we’ll now elaborate in much more detail. Now that we have covered the basics, we can now dive a little bit deeper into how the best NFTs work.Ĭrucially, if you’re thinking about buying NFTs yourself, it’s important that you have a firm grasp of how this niche blockchain sector works before risking any money. That is to say, you still have 1 BTC worth of value in your wallet.īut, in the case of NFTs, no tokens have a relationship with any other circulating digital assets, which is why they are described as non-fungible. On the other hand, cryptocurrencies like Bitcoin are fungible – meaning that if you were to swap 1 BTC for another 1 BTC, nothing much changes. In simple terms, this means that no two NFTs are the same.Īnd as such, NFTs are ideal for storing real-world value. However, where NFTs are different from the aforementioned digital currencies is that each token is identifiable via a unique transaction hash. Being built on top of a blockchain network also ensures that NFTs are verifiable in a transparent way. This ensures that NFTs can be transferred from wallet to wallet in a fast, secure, and low-cost way.
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