Non-fungible token

A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not interchangeable. This is in contrast to cryptocurrencies like Bitcoin, and many network or utility tokens that are fungible in nature.

Applications

Non-fungible tokens are used to create verifiable digital scarcity. NFTs are used in several specific applications that require unique digital items like crypto-collectibles and crypto-gaming. Popular blockchain games like CryptoKitties make use of non-fungible tokens on the Ethereum blockchain.[1] NFTs are used to represent in-game assets, which are in control of the user instead of the game developer.[2] NFTs also find potential use in digital art, by helping prove authenticity and ownership.[3]

Implementation

The Ethereum community has adopted the ERC-721[4][5] protocol as a standard for Non-Fungible Tokens on Ethereum. Projects like CryptoKitties, CryptoPunks,[5] and Decentraland[6] follow the ERC-721 protocol for their NFTs.

Growth and mainstream appeal

Non-fungible tokens made their way into mainstream news when CryptoKitties went viral [7][8] and subsequently raised a $12.5 million investment.[9] RareBits, a Non-Fungible Token marketplace and exchange, raised a $6 million investment.[10] Gamedex, a collectible cards game platform made possible by Non-Fungible Tokens, raised a $800,000 seed round.[11] Decentraland, a blockchain-based virtual world, raised $26 million in an initial coin offering,[12] and had a $20 million internal economy as of September 2018.[13]

The creation of the Non-Fungible Token protocol (ERC-721) on the Ethereum blockchain has caused other blockchain projects such as NEO to begin development of their own non-fungible token standards.[14]

References

  1. ↑ Wong, Joon Ian. "The ethereum world is now obsessed with breeding cartoon cats". Quartz. Retrieved 2018-05-02.
  2. ↑ "CryptoKitties shows everything can — and will — be tokenized". VentureBeat. 2017-12-04. Retrieved 2018-05-02.
  3. ↑ "The Art World Needs Blockchain – Irish Tech News". irishtechnews.ie. Retrieved 2018-05-02.
  4. ↑ "ethereum/EIPs". GitHub. Retrieved 2018-05-02.
  5. 1 2 "Crypto Collectables? Ethereum's Next Killer App Is on Its Way - CoinDesk". CoinDesk. 2017-12-15. Retrieved 2018-05-02.
  6. ↑ "Decentraland as a Playground for Crypto-Collectibles". Decentraland. 2017-12-13. Retrieved 2018-05-02.
  7. ↑ Wong, Joon Ian. "CryptoKitties is jamming up the ethereum network". Quartz. Retrieved 2018-05-10.
  8. ↑ "CryptoKitties Mania Overwhelms Ethereum Network's Processing". Bloomberg.com. 2017-12-04. Retrieved 2018-05-10.
  9. ↑ "CryptoKitties raises $12M from Andreessen Horowitz and Union Square Ventures – TechCrunch". techcrunch.com. Retrieved 2018-05-07.
  10. ↑ "Crypto-collectibles and Kitties marketplace Rare Bits raises $6M – TechCrunch". techcrunch.com. Retrieved 2018-05-07.
  11. ↑ "Blockchain startup Gamedex raises $0.8 million seed round to build platform for digital collectible card games like Pokemon – TechStartups". techstartups.com. Retrieved 2018-05-07.
  12. ↑ Russo, Camilla (2018-06-12). "Making a Killing in Virtual Real Estate". Bloomberg. Retrieved 2018-09-05.
  13. ↑ Hankin, Aaron (2018-09-04). "People are making more than 500% buying property that doesn't actually exist". MarketWatch. Retrieved 2018-09-05.
  14. ↑ "Crypto Collectibles: Ethereum Leads, NEO and TRON Hurry to Join - Cryptovest". Cryptovest. 2018-03-23. Retrieved 2018-05-07.
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