Non-Fungible Token (NFTs) Frequently Asked Questions about NFTs

 NFTs are generally known as a particular type of digital collectible, such as digital art, digital trading card, a short video, a picture. NFTs are unique items verified and secured by a blockchain, the same technology used for cryptocurrencies. An NFT provides authenticity of origin, ownership, uniqueness, scarcity, and permanence for any particular item.

Question 1: What is a non-fungible token (NFT)?

The full name of NFT is Non Fungible Token. Chinese is a non-homogeneous token, which is different from the homogenization of Bitcoin. The characteristics of NFT are unique. It is a unique and easy-to-verify digital asset that can represent GIF, pictures, Assets such as videos and music albums. In fact, you may have known about NFTs a long time ago. For example, the popular game of 2017, the crypto kit, paralyzed the Ethereum network, and the price of an NFT kit was as high as 600 ETH. And the recently popular NBA Top Shot are good examples.

Question 2: What are the characteristics of NFT?

The attributes of NFT make every NFT unique and true, which solves the big problems in the art and luxury industry. For example, LV is preparing to launch NFT to prove the authenticity of its luxury goods, or to track the life cycle of a single handbag.

Another feature is that ownership belongs to the user. For example, in traditional games, players cannot really own anything in the virtual world. But in blockchain games, the assets in the game are owned by the player. Even if the game is down or the server is shut down, the player still holds the NFT assets, which can also be converted into tokens for use in other games.

In theory, anything that exists online can be purchased as an NFT. NFT is "an encrypted token". Ryan Duffy, author of Emerging Tech Brew, explained that the biggest difference between NFT and cryptocurrency is that NFT is non-homogeneous, and they cannot be interchanged and cannot be divided. Think about Pokemon cards. Although every card can be traded, they are essentially different. In comparison, one bitcoin and another bitcoin are essentially the same and can be interchanged.

Question 3: Why should I have an NFT?

One of the main reasons for buying NFT is its emotional value. In this respect, NFT is not much different from the real thing, unless the buyer is a complete utilitarian and only cares about the material value of the product. In real life, no one buys lip gloss out of pure need. People buy it largely because of the happiness that lip gloss brings to them. The same is true for GIFs, pictures, videos or other digital assets. Another important reason for buying NFT is that it has room for value-added. You can make more money by buying and reselling NFT.

Question 4: How to buy NFT?

This process varies depending on the platform used. There are currently many NFT trading markets on the market, such as OpenSea, Known Origin, Rarible, and so on. For example, on Top Shot, you need to register to join a waiting list, which may already have thousands of NBA fans. When a digital asset is sold, you will be randomly selected to buy it. Although Top Shot accepts both U.S. dollars and cryptocurrency payments, some platforms only accept cryptocurrencies, such as OpenSea.

In general, there are four common methods, namely:

1. Buy potential NFT tokens on major trading platforms;

2. Purchase and sell NFT assets;

3. Become an encryption artist and issue your own NFT;

4. Stake NFT liquidity mining.

Purchasing tokens with the concept of NFT and purchasing NFT are actually two things. If you want to simply invest in the NFT track, you can buy top NFT tokens such as ENJIN, MANA, SAND, etc. on major exchanges.

If you want to participate in the NFT collectibles market, or buy and sell NFTs to make a difference, a general NFT market like OpenSea provides a channel to buy various NFT assets. In addition, there are also NFT platforms that specifically target cryptographic arts, such as SuperRare and Nifty Gateway. To learn more about how to use the platform, you can add researcher Sophia (ID: lovebit98) to ask.

Question 5: How to participate in NFT liquidity mining?

There are many NFT projects combined with liquid mining, such as Aavegotchi. Users can pledge Aave's tokens to obtain ghost-like NFT tokens. The collateral behind this NFT token is an interest-bearing token.

On Aavegotchi, users can obtain the image of little ghosts by mortgage atoken (equity tokens on Aave), and each little ghost is an NFT token. The special thing about Aavegotchi is that the collateral behind the little ghost is an interest-bearing token. As time accumulates, the value of the collateral will increase.

Question 6: How to determine whether the purchased NFT is genuine?

The ownership of the NFT is recorded on the blockchain, which is decentralized and exists on many people's computers in encrypted form. In order to avoid buying counterfeit products, you must see the source when buying NFTs. Take OpenSea as an example to check whether the NFT you intend to buy comes from the official store opened by the project on the platform. Popular projects will get the official certification of OpenSea. Secondly, you can first find out which project or artist the NFT you want to buy comes from through social media. Project parties and artists usually choose to promote on social media, and everyone can buy from the link they share.

Question 7: Is NFT the latest one?

NFT broke out recently, but not new. According to Andrew Steinwold, the origin of NFT can be traced back to Colored Coins supported by blockchain in 2012. The CryptoKitties boom in 2017 attracted people to rush to buy crypto kits, and NFT has truly become the mainstream.

Question 8: What are the application scenarios of NFT?

"Everything can be NFT."

The application range of NFT is also very large. We know that most assets in the real world are non-homogeneous assets, and if these assets are to be chained, or to find the corresponding digital form, then NFT will be the most suitable standard, so we firmly believe that this is the blockchain in The second largest application scenario outside of finance.

NFT can be applied to digital art works, collectibles, in-game items, virtual worlds, sports competitions, fashion entertainment, identity verification, insurance, infrastructure such as domain names, digitization of physical assets, electronic tickets or coupons and other application scenarios. Games and digital art can be said to be the two main application scenarios of NFT.

The NFT based on blockchain technology can record the player's status and achievements in the game. In-game items such as weapons, equipment, and characters can all become NFTs. NFT can ensure the ownership verification and authenticity of game items. CryptoKitties, Axie Infinity and Aavegotchi are all NFT game use cases.

Digital art is another mainstream application of NFT. Each piece of art can be presented in the form of NFT. Artists can ensure their own copyright of the work. Buyers can verify the authenticity of the purchased artwork. In addition, there is no need for intermediaries to intervene. Encrypted artists can earn more income. SuperRare, OpenSea and MakersPlace are examples of NFT's encryption art.

In-depth analysis: What are the application scenarios of NFT? The most comprehensive use case manual for non-homogeneous tokens

Question 9: Are there any specific use cases for NFT in the game field?

Take NBA TOP Shot as an example. NBA TOP Shot is a popular NFT card game recently, with a profit rate of hundreds of times.

The reason why NBA TOP Shot is so popular can be divided into three parts.

(1) One is the aggregation of sports fan effect + digital collectibles. The cards are mainly the iconic actions of NBA star players. This has a very sticky audience, so it is natural that such digital star cards are popular. . Because these star cards are sold in limited quantities, the price of cards for the wonderful moments of teams with more fans such as the Lakers and popular stars such as James and Curry is generally higher.

(2) The second is the trust endorsement of Dapper labs, the same team of CryptoMall.

(3) The third is fomo's emotional promotion. In fact, this is the commonality of digital collectibles-the earlier you enter the market, the more profitable it will be. For example, the transaction price of a star card with a cost price of only US$230 may reach about US$100,000.

Flow, also developed by Dapper labs, is also very popular recently. It is a public chain created specifically for the entertainment and cultural industry.

This kind of collectibles project is currently a NFT investment direction, and general projects will use the scarcity of NFT + fan effect to attract audiences.

Question ten: How to buy NFT encrypted artwork?

NFT art trading platform includes SuperRare, MakersPlace, Known origin. Each piece of art can be presented in the form of NFT. Artists can ensure their own copyright of the work. Buyers can verify the authenticity of the purchased artwork. In addition, there is no need for intermediaries to intervene. Encrypted artists can earn more income.

For those who want to buy NFT artwork, but don’t know which platform to buy on, you can click on this article. This link provides a detailed analysis of the six popular NFT trading platforms, such as the categories of collectibles traded on the platform, and the information of each platform. Comparison of features and commissions.

In-depth analysis: Who has the most potential among the six NFT trading platforms?

Question 11: What are the mainstream NFT trading platforms?

OpenSea is currently the world's largest NFT trading platform, established in January 2018. It covers a wide range of NFT categories, integrates NFTs on various platforms, and sells them at a more favorable price. It is currently the most used trading platform by mainstream NFT players. In terms of transaction volume, OpenSea ranked first.

Rarible was founded in 2020 and released the governance token RARI on July 15, allowing the most active creators and collectors on Rarible to vote for any platform upgrades, and participate in management and review. At present, there are 6,932 collectors on the platform, which can be regarded as a mainstream trading platform. In terms of the number of traders, Rarible maintains a leading position.

SuperRare focuses on trading those super rare artworks. This is an NFT market for trading unique digital art works. The platform is characterized by advanced management, simple experience, flexible payment methods, social profiles and mobile apps, and real-time auctions.

Question 12: What are the NFT standards?

Different blockchains have their own NFT standards. On Ethereum, the common NFT standards are ERC 721, ERC 1155 and ERC 998 protocols. On the WAX ​​blockchain, the common ones are SimpleAssets and AtomicAssets protocols. Among them, the most common standard for non-homogeneous tokens is ERC 721. CryptoKitties, founded in 2017, was once the first star project of NFT. What many people don’t know is that the ERC 721 standard is exactly what the project’s CTO Dieter Shirley developed. Created and released, it can be said that Dieter Shirley is one of the founders of NFT.

Question 13: What are the NFT tokens?

Many NFT projects have launched their own native tokens. For example, MANA is the token of Decentraland, and Flo w is the token of the NFT public chain platform launched by Dapper Labs.

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In addition to holding currency to rise, some NFT tokens can also be used to purchase land, goods and services in the virtual world, and to pay for platform fees. The RARI token of the digital collection trading platform Rarible can be used for governance, management and voting of featured artworks.

Question 14: What is the rising trend of NFT tokens?

In the previous round of crash, Bitcoin fell from US$58,000 to US$45,000, and most of the tokens were affected, such as sushi, uni, and link. Several of the coins with the smallest decline and the fastest rebound in this round are NFT-concept coins. To cite a few examples, since Sophia bought MANA for 50 cents last year, it has now more than 10 times.

Question 15: How to create your own NFT?

Some NFT creation platforms are dedicated to making it easy for anyone to create an NFT, regardless of whether they have the development skills to deploy smart contracts. The NFT trading market usually also provides tools or tutorials to guide users to create their own NFT. For example, trading platforms such as OpenSea and MintBase also provide their own creation tools.

For example, tools made by Mintabse and Mintable platforms allow ordinary people to easily create their own NFT. Mintbase is based on ERC721 to create NFT. The gas fee for casting NFT on different platforms ranges from US$2 to US$32.

The OpenSea platform also supports NFT creation, and it is completely free, and users do not need to pay a fee to deploy smart contracts. Click "Create" in the upper right corner of the website to start creating.

Now, OpenSea has released an NFT maker that does not require gas fees. When creating and selling NFTs, there is no need to pay any gas fees.

Question 16: How to evaluate the NFT project? Are there any reference standards?

(1) The first is the quality of the project and the reliability of the project party. Because the threshold of NFT issuance is extremely low and it is easy to be imitated and plagiarized, the attention to the influence of the issuance team affects the judgment of the potential for subsequent transactions.

(2) The degree of activity of the community. NFT is more dependent on market activity than DeFi, so sneaking into the community and observing the community's discussion heat is one of the evaluations that indirectly measures whether NFT issuance and trading are likely to be profitable. And just comparing the number of people in the community is not enough. The number in the community can easily be faked. Pay attention to how hot the discussion is in the community.

(3) Transaction records in the market. These historical transaction data can be found on the Nonfungible website, after all, these data are publicly visible. It is worth noting that the evaluation of NFT projects is not based on the assets for sale on the platform, because the scarcity and uniqueness of NFT determines that the market's evaluation criteria for each asset are constantly changing.

(4) Unlike homogenized tokens, NFTs also have aesthetic judgment requirements. There are many shoddy NFT artworks on the Internet that need to be screened by themselves.

(5) The scarcity of NFT itself. For example, the total amount of CryptoPunk is fixed at 10,000. Unlike CryptoKitties, which can be generated infinitely. As the NFT industry continues to expand, the scarcity of CryptoPunk itself will make them more valuable. In the last quarter of 2020 and the first two months of 2021, sales around CryptoPunk have reached tens of millions of dollars.

Question 17: What is the prospect of NFT development?

Non-homogeneous tokens will quietly prevail in 2020. As people begin to see the potential value and utility of NFTs, there will be a lot of room for growth in the NFT market in 2021. Nearly 30,000 interviewees believe that NFT is the next hot topic after DeFi, and the combination with DeFi will lead to a new round of NFT boom. In general, NFT has a bright future. As Google search trends show, interest in NFTs has exploded.