NON FUNGIBLE TOKENS
Non-Fungible Tokens (NFTs) are digital assets that use blockchain technology to represent
unique and indivisible items such as artwork, music, videos, and other forms of digital media.
They provide a way to certify ownership and provenance of digital items, and have gained
popularity in recent years due to their ability to create scarcity and uniqueness in the digital
NFTs are a type of cryptocurrency that are unique and non-interchangeable. Unlike other
cryptocurrencies such as Bitcoin and Ethereum, which are fungible and interchangeable,
each NFT represents a one-of-a-kind asset that cannot be replicated or divided. This means
that each NFT has its own unique digital signature that is recorded on a blockchain, making
it easy to verify ownership and prevent duplication.
❑ Working Of NFT’S
❑ Blockchain and Fungibility
❑ Characteristics of NFT’S
❑ Advantages of NFT’S
❑ Technologies used in NFT’S
- It all started with the first NFT ever created, called
Quantum, which was minted by Kevin McCoy on
Namecoin in 2014. But several other NFTs were
launched on pre-Ethereum blockchains over the
following years — for example, Spells of Genesis
launched in 2015, and stands as the first-ever
blockchain-based game. Rare Pepes came out in 2016
and helped kick off the first crypto art market.
- However, these projects failed to reach widespread
popularity. They remained mostly unknown to all but
those who were well-versed in cryptocurrency and
- For typical consumers, NFTs only began to gain
mainstream momentum in 2017. Around this time, the
first NFT collections were launched on the Ethereum
blockchain. Previous blockchains made trading and
transferring ownership impressively difficult.
• Prior to 2021, two catalysts arguably helped increase price points and speed public interest along. The first
was the COVID-19 pandemic, which forced many people to be more digitally native and connect with each
other on platforms like Twitter and Clubhouse, where the NFT community has built a strong presence.
• The second was Beeple. The longtime artist turned into an NFT pioneer when he became the first creator to
sell an NFT with a major auction house. When the Christie’s auction for his “Everydays — The First 5000
Days” came to a close on March 11 at an eye-popping $69 million, NFTs could no longer be ignored.
• The sale made headlines in papers around the world, and more sales soon followed. Edward Snowden’s
piece, Stay Free, sold for $5 million in April. In June, CryptoPunk #7523 sold for $11 million. In December,
XCopy’s “Right-click and Save As Guy” sold for $7 million.
WORKING OF NFT’S
NFTs are created through a process called minting, in which the
information of the NFT is recorded on a blockchain. At a high
level, the minting process entails a new block being created, NFT
information being validated by a validator, and the block being
closed. This minting process often entails incorporating smart
contracts that assign ownership and manage the transferability of
As tokens are minted, they are assigned a unique identifier
directly linked to one blockchain address. Each token has an
owner, and the ownership information (i.e., the address in which
the minted token resides) is publicly available. Even if 5,000 NFTs
of the same exact item are minted (similar to general admission
tickets to a movie), each token has a unique identifier and can be
distinguished from the others.
Blockchain and Fungibility
• Like physical money, cryptocurrencies are usually fungible from a financial
perspective, meaning that they can be traded or exchanged, one for another. For
example, one bitcoin is always equal in value to another bitcoin on a given exchange,
similar to how every dollar bill of U.S. currency has an implicit exchange value of $1.
This fungibility characteristic makes cryptocurrencies suitable as a secure medium of
transaction in the digital economy.
• For this reason, NFTs shift the crypto paradigm by making each token unique and
irreplaceable, making it impossible for one non-fungible token to be "equal" to another.
They are digital representations of assets and have been likened to digital passports
because each token contains a unique, non-transferable identity to distinguish it from
other tokens. They are also extensible, meaning you can combine one NFT with
another to create a third, unique NFT.
ADVANTAGES OF NFT’S
• Proof of ownership and authenticity
• Scarcity and uniqueness
• Increased revenue opportunities
• Greater control over distribution and usage
• Fractional ownership
TECHNOLOGIES USED IN NFT’S
• Ethereum: Ethereum is one of the most popular blockchain platforms for creating and trading NFTs.
Ethereum uses a smart contract protocol called ERC-721, which allows for the creation and ownership
of unique digital assets.
• Binance Smart Chain: Binance Smart Chain is a blockchain platform that offers fast and low-cost
transactions, making it an attractive option for NFT creators and collectors. Binance Smart Chain
supports a variety of NFT standards, including BEP-721 and BEP-1155.
• Polygon: Polygon (formerly Matic Network) is a Layer 2 scaling solution for Ethereum that offers
faster and cheaper transactions. Polygon supports Ethereum-compatible NFTs and offers a bridge to
Ethereum, allowing for interoperability between the two platforms.
• Flow: Flow is a blockchain platform designed specifically for creating and trading digital assets,
including NFTs. Flow uses a unique programming language called Cadence, which is designed to
make it easier to create and interact with NFTs and other digital assets.
1 -C. Cimpanu, “Miner found at USA department of defense,” https:
2 - K. Parrish, “Uk government plugin based mining,” https://www.
3 - A. Milano, “Russian scientists arrested crypto mining nuclear lab,”
https://www.coindesk.com/russian- scientists-arrested-crypto-mining-nuclear-lab, accessed:
4 - D. Goodin, “Miners in youtube ads,” https://arstechnica.com/in formation-
miners/, accessed: 2020-04-13.
5 -C. Cimpanu, “Mikrotik router hack affect 200k routers in the world,”
campaign-touches-over-200-000-mi krotik-routers/, accessed: 2021-2-23.
- In conclusion, NFTs (Non-Fungible Tokens) represent a new and innovative way to create, own,
and trade unique and valuable digital assets. Built on blockchain technology, NFTs provide a
secure and transparent way to verify ownership and authenticity of digital assets, while also
creating scarcity and uniqueness in the digital world.
- NFTs have gained popularity in recent years, with artists, musicians, and other creators using
them to sell their work directly to collectors and fans, bypassing traditional intermediaries such
as galleries or record labels.
- NFTs also offer new revenue opportunities for creators, as they can receive ongoing royalties
on the secondary market for their digital assets.
- However, the market for NFTs is still relatively new and evolving, and there are some concerns
around environmental impact, speculation, and the potential for fraud and counterfeiting.
- As the market matures, it will be important to address these concerns and ensure that NFTs are
being used in a responsible and sustainable way.