Ethereum has been the star of the cryptoeconomy in 2020 thanks to the breakout success of the smart contract platform’s rising sectors, e.g. decentralized finance.
Beyond DeFi, non-fungible tokens (NFTs) have given life to another one of Ethereum’s most promising, though comparatively lesser known, arenas. Notably, the supermajority of NFT activity to date has taken place on Ethereum.
If DeFi is made of “money legos,” then NFTs can be somewhat similarly understood as programmable “media legos.” Simply put, these special tokens are provably scarce digital assets, of which the provenance and ownership are perpetually guaranteed by the Ethereum blockchain.
This new crypto-native token standard can empower creators — whether they be artists, developers, or beyond — in a range of ways that weren’t possible before, e.g. caking automated royalties right into digital assets.
In today’s post, then, let’s break down NFTs: what they are, how to make and sell them, how to collect them, and more.
What Are NFTs?
Fiat cash is fungible, e.g. a $5 USD bill is completely interchangeable with any other $5 USD bill. Similarly, cryptocurrencies like bitcoin and ether are fungible, i.e. 1 BTC is interchangeable for 1 BTC and 1 ETH is interchangeable for 1 ETH, etc.
On the flip side, NFTs, which rely on special token standards like ERC-721 to ensure uniqueness, are non-interchangeable and verifiably unique and scarce courtesy of blockchain tech.
In this way, NFTs are like digital collectibles or proofs-of-ownership that are valuable precisely because they are 1/1 or limited-edition assets that are liquid and useful atop a platform like Ethereum.
The NFT ecosystem took first took off in 2017 with the launch of pioneering collectibles projects like CryptoPunks and CryptoKitties, and since then the space has bloomed toward a variety of new use cases and industries. Per analytics site NonFungible.com, the NFT…