The Ultimate Guide To Understanding NFTs

By Steve Nico Williams

Want to grasp the full scope of the NFT landscape and its underlying principles?

If yes, then you should keep reading because you have found the right book.

It's possible to make more money with non-fungible tokens than with other coins or cryptocurrencies, but only if you know what you're doing.

If you have just heard about No

• Language: English
• Publisher: NFT Publishing
• Release date: Oct 1, 2022
• ISBN: 9781805340010

Book preview

The

Ultimate Guide

to Understanding

NFTs

Steve Nico Williams

Summary

Understanding the Concepts

Behind NFTs

The procedure of determining who the rightful owner of a physical or digital asset is an essential part of the operation of the vast majority of organizations and computer systems. In addition, throughout the course of history, individuals have accumulated rare and precious goods such as property, art, and jewels in their collections. This fad has now spread into the realm of collectibles, such as trading cards, autographed souvenirs, and other such items. Paper-based or centralized digital systems have traditionally been used to enable the ownership and validity of these assets.

However, these methods are frequently inefficient, cause friction in the transfer of assets, and create possibilities for fraud.

Non-fungible tokens, often known as NFTs, are a type of cryptocurrency token that cannot be divided and is unalterable. One NFT cannot be substituted for another NFT, nor can the complete thing be disassembled into its component pieces and utilized individually. NFTs provide users with a wide variety of opportunities for the production and exchange of digital goods, such as ii

unique works of art and blockchain-based collecting games like crypto kitties. NFTs help establish the scarcity of rare assets, both digitally and in the physical world, as wel as the origin of those assets. Ethereum, specifically the ERC-721 token standard, is almost always used when developing non-fungible tokens.

NFT gaming has had enormous expansion since that time. In January 2019, the business that is responsible for CryptoKitties, Dapper Labs, started cooperating with other NFT providers to provide interoperability between different gaming platforms. Because of this, a native NFT

created on one platform may now be employed on another platform. NFT initiatives have been produced by a variety of wel -known organizations, including the National

Basketball

Association

(NBA),

which

collaborated with the video game company Ubisoft to create NBA Top Shot (NBA).

The scope of activities that might make use of NFTs has greatly broadened beyond gaming. Businesses and blockchain initiatives are investigating how non-fungible tokens might be used to identify, certify, and ticket events, as wel as provide partial ownership of both digital and physical goods. Any situation in which there is a requirement for transparent ownership and traceability might qualify as a potential use case for NFT.

NFTs continue to confront difficulties in terms of their interoperability and scalability; nonetheless, the technology has demonstrated its usefulness in establishing the uniqueness, scarcity, and ownership of assets that are both digital and physical in nature. NFT

iii

technology, which is already a mainstay in blockchain gaming and collectibles, is a significant growth area of the blockchain business. This is because application cases for NFT technology are expanding into digital identity records and the representation of scarce real-world goods.

iv

Table of Contents

Understanding the Concepts Behind NFTs i

Chapter 1 Understanding the Concepts Behind NFTs 1

1.1: Introduction to Blockchain Technology ....................... 1

1.2: Understanding Cryptocurrency and Crypto Tokens .. 4

1.3: Ethereum Tokens and ERC Standards ......................... 11

Chapter 2 Fundamentals of NFT

21

2.1: Meaning of Fungibility .................................................... 21

2.2: Introduction to Non-fungible tokens (NFTs) ................ 23

2.3: Fungible vs. Non-fungible Tokens ................................. 28

2.4: Fungible vs. Non-fungible Tokens ................................. 33

2.5: Fungible vs. Non-fungible Tokens ................................. 34

2.6: History of NFTs ................................................................... 36

Chapter 3 NFT & Digital Art

39

3.1: NFT Art ............................................................................... 39

3.2: NFT Digital Arts for Creators ........................................... 41

3.3: How to Create an NFT Art ............................................. 46

3.4: Make Your Artwork An NFT ............................................ 48

Chapter 4 NFT Marketplaces and Wallets 51

4.1: NFT Marketplaces............................................................ 51

4.2: NFT Wal ets ........................................................................ 59

Chapter 5 Create, Buy and Sell NFTs 75

5.1: Disclaimer ......................................................................... 75

5.2: Creating NFTs ................................................................... 83

5.3: Ways to Buy NFTs ............................................................. 86

v

5.4: Ways to Sell NFTs .............................................................. 89

5.5: Security Aspect of NFTs .................................................. 93

Chapter 6 Challenges to Mass Adoption and The Future of NFTs

99

6.1: Roadblocks ....................................................................... 99

6.2: Future of NFTs ................................................................. 101

vi

Image 1

Chapter 1

Understanding the Concepts

Behind NFTs

1.1: Introduction to Blockchain Technology A blockchain is a growing collection of documents known as blocks that are connected together via encryption (cryptography is about constructing and analyzing protocols that prevent third parties or the public from 1

Image 2

Understanding the Concepts Behind NFTs reading private messages). The timestamp ensures that the transaction data existed at the time the block was published so that it could be included in the hash.

Because each block carries information about the one that came before it, they form a chain, with each new block reinforcing the ones that came before it. As a result, blockchains are resistant to data manipulation since the contents of any one block, once recorded, cannot be modified

retrospectively

without

impacting

all

subsequent blocks.

Uses of Blockchain

Blockchain technology may be used in a variety of applications. The major application of blockchains is as a distributed ledger for cryptocurrencies such as bitcoin; but, by late 2016, a few other operational products have grown from proof of concept. As of 2016, several firms were testing the technology and using it at a minimal 2

The Ultimate Guide to Understanding NFTs level to assess the effects of blockchain on organizational efficiency in their back office.

In 2019, it was predicted that over $2.9 billion was invested in blockchain technology, representing an 89

percent increase over the previous year. In addition, International Data Corp anticipates that corporate investment in blockchain technology would reach $12.4

billion by 2022. Furthermore, blockchain technology has the potential to generate more than $3 trillion in yearly company

value

by

2030,

according

to

PricewaterhouseCoopers (PwC), the world's second-largest professional services network. PwC's projection is bolstered by a 2018 research in which they polled 600

corporate leaders and discovered that 84 percent had at least some exposure to employing blockchain technology, indicating a substantial demand and interest in blockchain technology.

Individual adoption of blockchain technology has also expanded significantly since 2016. According to 2020

data, there were more than 40 million