Get to Know NFTs: Your Comprehensive Guide to the World of Digital Assets
NFTs, or Non-Fungible Tokens, have been a fixture of the crypto space for quite some time, but it was only recently that they began to receive significant attention.
If you’re reading this, there’s a good chance you’ve already been exposed to NFTs via various media outlets. They seem to be everywhere nowadays, and their sudden upsurge in popularity can be attributed to high-profile NFT sales like Beeple’s digital artwork “Everydays: The First 5000 Days,” which was auctioned for a mind-boggling $69 million by Christie’s auction house in March 2021.
This sale was groundbreaking for the crypto and blockchain landscape since it was sold by one of the world’s most respected auction houses, thereby providing further validation for the NFT era. The hype surrounding the sale, as well as other high-value NFT transactions, sparked a flurry of interest and investment in the realm of digital assets, resulting in an increase in mainstream awareness and adoption of NFTs.
Nonetheless, as more people become intrigued by NFTs, the degree of bewilderment about their essence and possible uses also increases. That’s where our all-encompassing guide comes into play.
In this article, we will help you understand what NFTs are, how they function, and why they are such a hot topic in the digital realm of cryptocurrencies, blockchains and virtual gaming.
Whether you are an artist, a collector, an investor, or merely curious about the future of digital ownership, we have you covered. So, let’s delve into the world of NFTs and discover their potential.
What are NFTs?
So what exactly are NFTs, and where did they come from?
Well, they’re essentially unique digital assets that are verified on a blockchain.
A blockchain is a digital ledger or database that is used to store transactional data on a decentralized network. Think of the blockchain as a spreadsheet recording all the people that own or transact certain NFTs. Everyone who owns an NFT can basically check the blockchain to confirm proof of ownership of that NFT.
Thanks to the immutability of the blockchain, even cryptocurrencies like Bitcoin are able to solve the problem of double spending on their network as the blockchain protects the data using cryptographic encryption. This prevents any individual from gaming the system.
In the same manner for NFTs, the blockchain acts as a single source of truth in regards to who owns which and what NFT.
Each NFT (unlike cryptocurrencies) is non-fungible, meaning you cannot exchange one NFT for another NFT as you would a Bitcoin for another Bitcoin or an Ethereum Ether for any other coin.
It’s the same as you trading your favorite photo with your father or loved one for a piece of cake at your local coffee shop. The favorite photo is a non-fungible asset with sentimental value beyond that of the delicious cake. For the cake, you can easily exchange it with cryptocurrencies or a national currency.
When it comes to NFTs, the term “non-fungible” refers to the fact that each NFT is unique and cannot be exchanged for something else of equal value. In other words, non-fungible assets are one-of-a-kind and cannot be replicated or duplicated in the same way that fungible assets, like cryptocurrencies or traditional currencies, can be replicated.
For example, if you have a dollar bill and exchange it for another dollar bill, you still have the same value. The two dollar bills are interchangeable, just like any two Bitcoins, and both assets have the same value.
However, if you have an NFT, like a digital artwork, and exchange it for another NFT, like a different digital artwork, the two are not equivalent. Each NFT has its own distinct characteristics and value. Same as the sentimental photo we talked about earlier, whose value is priceless.
This uniqueness is what makes NFTs valuable, as collectors and enthusiasts are willing to pay a premium for something that is truly one-of-a-kind. NFTs are a way for creators to monetize their digital content and for buyers to own a piece of unique digital art or other assets.
NFTs Can Represent Anything
That’s right. You can use an NFT to represent anything.
NFTs have indeed transformed the way we perceive digital assets. One of the most impressive attributes of NFTs lies in their capacity to enable ownership of decentralized networks such as the internet.
In the past, ownership of digital content on the internet was unheard of. After all, anyone could easily copy and paste your photo, your music collection, or your sensitive documents and claim ownership.
With NFTs, however, you can have a digital certificate of ownership that proves you are the owner of said digital asset.
Regardless of whether you are an artist, composer, writer, or social media influencer, NFTs provide a powerful and new approach to capitalize on your innovative projects.
Once you buy an NFT, you gain exclusive rights to own that particular asset. This allows you to store and showcase your NFT in either a digital wallet or physical location, enhancing its worth as an addition to your collection.
For musicians, NFTs present an exciting opportunity to sell exclusive rights to their music, such as unreleased tracks, live performance recordings, and merchandise. With the ability to produce NFTs for any piece of digital artwork, musicians can engage with their audiences in an unprecedented way, offering them a chance to own a distinctive piece of the brand while at the same time acting as investors.
How NFTs are created and stored
To create an NFT, an artist or creator would first need to choose a blockchain platform that supports NFTs.
Some of the popular blockchain platforms for creating NFTs include Ethereum, Binance Smart Chain, Solana, Cosmos, Crypto.com, Aleph Zero, and Flow, to mention a few.
Once the platform has been chosen, the creator needs to create a digital file of the artwork they want to tokenize. This file can be an image, video, music, or any other digital asset. The creator can then upload the digital file onto the blockchain platform and mint it as an NFT.
Minting an NFT involves creating a smart contract on the blockchain that represents the unique digital asset. The smart contract includes details such as the name, description, and metadata of the NFT. It also includes the digital signature of the creator, which verifies their ownership of the asset.
Once the NFT is minted, it can be sold or traded on a blockchain marketplace or through a private transaction. The buyer of the NFT, in this case, will buy the asset attached to the NFT. Therefore, once the creator has confirmed the transaction, the digital asset can be transferred to the custody of the buyer.
The value of any NFT (similar to cryptocurrencies) is determined by market demand and the perceived value of the underlying digital asset.
Also, keep in mind that NFTs can also be fractionalized. This means that they can be divided into smaller pieces and sold to multiple buyers. This allows for greater liquidity and accessibility for investors who may not have the resources to purchase an entire NFT.
Most Popular NFT Marketplaces on Top Networks:
Ethereum is one of the most sought-after blockchains on the planet when it comes to NFTs. With a market cap that’s only been growing since its inception in 2013 and second only to Bitcoin, Ethereum has firmly established itself as the go-to destination for anyone looking to dabble in NFTs. And despite the increasing number of blockchain platforms that support NFTs nowadays, Ethereum still reigns supreme when it comes to NFT trade volumes and anything blockchain related.
Every NFT built on the Ethereum network exists as a smart contract designed to act as a certificate of ownership for any asset. You can even use QR codes or similar tools to attach ownership of a physical object to the Ethereum blockchain via NFTs.
Simply put, smart contracts bridge the gap between digital and physical assets as they enable easy tracking of digital assets.
Thanks to Ethereum’s position in the crypto and blockchain space, most major NFTs have been launched on its blockchain network, with some notable ones such Cryptopunks, CryptoKitties and Bored Ape Yatch Club.
Here are the top marketplaces to find exciting NFTs on Ethereum’s network:
Top NFT Marketplaces on Ethereum
OpenSea, Rarible, SuperRare, and Nifty Gateway are four of the most popular NFT marketplaces on the Ethereum network. Each of these NFT marketplaces comes with unique features that cater to the needs of different types of users in the NFT space.
OpenSea, launched in 2017, has become the go-to platform for creators, collectors, and investors to buy, sell, and discover NFTs. It offers a user-friendly interface that makes it easy to navigate. You can easily search and filter through thousands of NFTs available on the platform. OpenSea supports a wide range of NFTs, including art, music, virtual worlds, domain names, and more. Some of the most popular NFTs sold on OpenSea include CryptoPunks, Bored Ape Yacht Club, and Axie Infinity.
Rarible is a relatively new NFT marketplace. However, it has quickly gained popularity among creators and collectors due to its unique features. Rarible is easily accessible and anyone can use it to create, buy, and sell NFTs.
You don’t need to have any technical skills to navigate the marketplace. From the main dashboard, users can create their own storefronts and earn royalties on their sales. Rarible supports a wide range of NFTs, including digital art, gaming items, music, videos, and more.
With over 400,000 NFTs minted so far and more than 2 million users, Rarible is a noteworthy NFT marketplace for those looking for new and exciting NFT projects.
Then we have SuperRare which was launched in 2018 as an invite-only NFT marketplace that features high-quality NFTs from established and up-and-coming artists. Its reputation for showcasing unique and rare NFTs that are not available on other marketplaces has made it a popular platform among collectors.
While this is not a beginner-friendly NFT marketplace, it is a good starting point for professional artists looking to connect with a community of like-minded individuals.
One of their most outstanding features is the fact that they have a robust verification process that ensures the authenticity and provenance of the NFTs listed on the platform. Some of the most popular NFTs sold on SuperRare include Trevor Jones’ “Picasso’s Bull” and Pak’s “The Pixelated Revolution.”
Nifty Gateway, also launched in 2018 and has now established a reputation for its user-friendly interface and its partnerships with high-profile artists and celebrities.
You can use this marketplace to buy NFTs from artists such as Trevor Jones, Cey Adams, Kenny Schar, and others. Even popular artists such as Eminem have launched their NFT projects on Nifty Gateway.
Its drop events regularly feature limited edition NFTs released in collaboration with artists, musicians, and celebrities. Some of the most popular NFTs sold on Nifty Gateway include Grimes’ “WarNymph Collection” and Trevor Jones’ “The Bitcoin Angel.”
Solana is a high-performance blockchain that is well-suited for the development of decentralized applications, just like Ethereum. It was founded by a talented team of developers led by Anatoly Yakovenko. Mr Yakovenko is also a former engineer at Qualcomm and Dropbox; therefore, he boasts tons of experience in the tech world.
The team at Solana built their blockchain with a focus on solving the issue of sluggishness and a lack of scalability on popular chains such as Ethereum. Therefore, they set out to create a platform that could handle a high volume of transactions without breaking a sweat.
One of Solana’s standout features is its ability to process up to 65,000 transactions per second. This is all thanks to the chain’s unique consensus algorithm, known as Proof of History (PoH). This fancy algorithm allows nodes on the network to agree on the order of transactions within a short amount of time and efficiently. This significantly reduces confirmation periods and also reduces network fees during transaction processing.
Here are some of the top NFT Marketplaces you will find on the Solana chain.
OpenSea is a huge marketplace for NFT that does not only support NFTs in Ethereum’s network but also on Solana. Some of the top Solana-based NFTs you will find on OpenSea include:
- Solana Monkey Business
Magic Eden is a pioneering NFT marketplace that was specifically built for Solana. However, due to its growing popularity, it has now expanded to multiple chains, including Ethereum and Avalanche. This marketplace enables users to explore and collect rare virtual items, build their own collections, and connect with like-minded individuals in the crypto gaming and NFT world.
One of the standout features of Magic Eden is its in-game reward system, which incentivizes players to be more active. Players can earn rewards such as magic points by participating in various activities on the platform, such as completing quests, interacting with other users, and trading NFTs. These magic points can then be redeemed to purchase exclusive NFTs and items, creating a unique and engaging experience for users.
Coral Cube is a decent NFT marketplace if you are searching for unique and rare digital assets. You can redeem most of the NFTs in this marketplace for real-world value, such as in gaming ecosystems and even as gift cards.
This gives NFT collectors a huge incentive to participate. Assets listed on this marketplace come with an on-chain feature where users can buy and sell NFTs with each other in a secure and efficient manner. This marketplace adds to the overall user experience, making it easier for individuals to explore and engage with the Coral Cube platform.
In addition, there is a staking feature that incentivizes users to participate in the platform’s ecosystem. By staking their assets, users can earn rewards in the form of CORAL tokens, which can be used to further enhance their Coral Cube experience. Some of the top NFTs on this marketplace include DeGods, y00ts, and ABC, to mention a few.
At its core, the Cosmos network is an independent and decentralized network for interoperable blockchains. That means that other blockchains can leverage the Cosmos ecosystem and network to become interoperable and compatible with other blockchains.
Cosmos uses a protocol called the Inter-Blockchain Communication (IBC) protocol to allow different blockchains to communicate with each other. The IBC protocol enables secure and fast communication between different blockchains, making it easier for developers to build dApps that can interact with multiple blockchains at the same time.
Just recently, the Cosmos ecosystem launched Interchain NFTs. This is a protocol that gives NFT holders and users the freedom to move their NFTs to any chain that is compatible with Cosmos’s IBC protocol. With this addition, NFT holders will be able to choose the dApps, marketplaces, and services they want to use, thus further advancing interoperability. Therefore, users can use the upgraded IBC Interchain Standard (ICS-721) to track ownership and transfer their NFTs across multiple chains.
At the moment, Stargaze is the biggest IBC-enabled NFT marketplace on Cosmos. This is a fully decentralized NFT marketplace meaning it is fully community owned and secured by a network of over 100 validators. Its interoperability with Ethereum and other blockchains, thanks to the IBC protocol, means you can use it to trade NFTs from other chains.
Crypto.com is a crypto exchange and ecosystem designed to operate on its own blockchain called Cronos Chain, also known as CRO Chain.
Cronos is a fast and easily portable platform that s compatible with Ethereum’s EVM. with a growing user base of over 10 million people, Crypto.com is based on a Proof of Stake (PoS) consensus mechanism and uses a modified version of the Tendermint Byzantine Fault Tolerance (BFT) consensus algorithm to achieve fast block times and high transaction throughput.
In addition to its blockchain and exchange platform, Crypto.com also offers a suite of other services, including a mobile wallet app and a debit card that allows users to spend their cryptocurrencies at any merchant that accepts Visa.
In terms of NFT marketplaces, Crypto.com launched its own NFT marketplace in March 2021. This marketplace features a simple user interface and allows users to buy NFTs with their credit or debit card purchases.
Aleph Zero (AZERO)
Aleph Zero is a blockchain project that aims to revolutionize the way we think about decentralized systems. At its core, Aleph Zero is designed to be a fast, privacy-enhancing, secure, and scalable blockchain network that can be used for a wide range of applications, from finance to supply chain management.
One of the key features of Aleph Zero’s custom-made chain is its consensus algorithm, which is based on a novel approach called Proof-of-Stake with Directed Acrylic Graphs (DAG). This chain’s algorithm is designed with a rotating committee of validators and a unique data structure designed to be both energy-efficient and secure. Therefore, it can allow for fast transaction processing times while maintaining the integrity of the network.
Another important aspect of Aleph Zero is its focus on scalability. Unlike some other blockchain networks, which can become congested and slow down as the number of users and transactions increases, Aleph Zero is designed to be able to handle large volumes of data and transactions without compromising on speed or security.
At the moment, Art Zero is the top NFT marketplace built on Aleph Zero’s chain. This NFT marketplace is designed to feature NFTs that go beyond the typical NFT hype and add utility for real-world use cases. The launch for the testnet of the project is scheduled for the first quarter of 2023 once smart contracts launch on the Aleph Zero mainnet. The marketplace will allow users to discover, trade and collect NFTs on Aleph Zero’s blockchain network.
The benefits and drawbacks of using NFTs
Just as with any new technology, NFTs come with their own sets of advantages and disadvantages.
Here is a breakdown.
Benefits of NFTs:
NFTs, bring the concept of uniqueness and verifiable ownership to the digital realm. With an NFT, you can pretty much create a unique digital asset from scratch and sell it on the marketplace. This can be particularly valuable in the world of art and collectibles, where authenticity and provenance are key factors in determining value.
NFTs also bring about increased revenue opportunities for their users. Thanks to NFTs, creators, and artists, not to mention entrepreneurs, can monetize their digital content in new and innovative ways. Supply chain managers can also track their goods across the supply chain and avoid the costs of dealing with intermediaries.
Business owners in the digital economy can use these NFTs to sell their digital assets directly to collectors without the need for middlemen or even banks and galleries, or auction houses, as is the case in traditional markets. This can lead to increased revenue and greater control over their creations.
NFTs are decentralized and transparent. Thanks to the blockchain, NFTs can be used as digital certificates of ownership. The blockchain’s immutability and transparent nature make it difficult for fraudsters to manipulate ownership records or create counterfeit NFTs.
Drawbacks of NFTs:
NFTs and the blockchain networks that support them require a significant amount of energy to create and maintain, which can have a negative impact on the environment. Critics argue that the energy consumption associated with NFTs and cryptocurrency, in general, is unnecessary and unsustainable. The good news is that plans are underway to create more efficient blockchain networks such as the ones listed in this article.
Another disadvantage of the NFT space is the lack of regulation. The world of NFTs is largely unregulated, which means that there is a risk of fraud or manipulation. This can make it difficult for buyers to know if they are purchasing a legitimate NFT.
Also, while NFTs have gained popularity in certain circles, they may not have broad appeal beyond the world of art and collectibles. This could limit their potential for widespread adoption and use. Even so, it is still too early to tell what the future holds for NFTs.
To wrap up, there is no denying the impact NFTs have had on mainstream consciousness. NFTs have changed how people perceive and trade digital assets.
As mentioned, NFTs offer a solution for creating unique digital assets that are verified on a blockchain and cannot be replicated or duplicated. They have already created a buzz in the art world, and their potential applications in various industries, such as gaming, music, and sports, are limitless.
If you are planning to buy, store, or trade NFTs, it’s important to keep a few best practices in mind. Firstly, do your research and only buy NFTs from reputable sources. Secondly, ensure that you have a secure storage solution in place for your NFTs, such as a hardware wallet. Lastly, be aware of the risks involved in trading NFTs and only invest what you can afford to lose.
Looking to the future, we can expect to see NFTs being used in exciting ways. For example, in the gaming industry, NFTs are already being used to create unique in-game items that are traded and owned by players. This gives players more control over their journey while playing and interacting with other players in the game. These are just a few examples of what NFTs bring to the table.
How Ubik Capital Facilitates Staking and Delegation
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Proof of Stake is an increasingly popular consensus algorithm, especially with Ethereum’s transition into PoS. There are many variations of a PoS consensus algorithm; however, with this guide, you should understand how it generally works.
Ubik Capital is an excellent option if you’re interested in earning rewards by staking your coins.
About Ubik Capital
Capital is a Proof-of-Stake service provider, validator, and investor. Ubik Capital provides staking-as-a-service as well as investments to various blockchain projects. Ubik Capital secures major networks and is a trusted staking provider with years of industry experience.
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Disclaimer: Not financial advice. Cryptocurrency and blockchain investments are high risk, can incur substantial losses, and are not suitable for everyone. Please consult a professional before considering investment in any cryptocurrency. This article does not encourage or support any specific investments, use of applications or technology, or financial direction. This article is for informational purposes only and should be verified and validated externally for 100% accuracy.