Hello everyone,

I'm thinking of writing posts with general information like this between my options articles. I want to talk about Non-Fungible Tokens (NFTs), a topic that's also in my area of interest.

I'll start with some classic questions and then give a few examples of why they're valued so highly. You'll be amazed at how limitless the possibilities are.

What are NFTs, which include pixelated images, game characters, and more that sell for millions of dollars?

Fungibility
In economics, "fungibility" means "interchangeability". These are goods, products, or commodities whose individual units are essentially interchangeable. For example, $1 can be exchanged for dimes. But can each of the 13 people in The Last Supper painting be exchanged for the whole picture? This is an example of a Non-Fungible product.

Token
I'd like to start with an interesting fact. ETH is not a token, but everything except ETH is a token. ETH is the native currency of the Ethereum blockchain technology. What's bought and sold is itself, while others are tokens, currencies on the Ethereum network. Also, Fungible Tokens are created on the Ether network thanks to the ERC-20 standard, which is the biggest feature that separates ETH from BTC. While only BTC transfer is possible on the Bitcoin network, you can transfer many tokens on the Ether network and create your money as you wish. This is the biggest factor that increases the use of the network.

Non-Fungible Token
We've learned all the terms, but where does NFT fit in? NFTs could emerge with the ERC-721 network because they needed to have a unique, indivisible feature that couldn't be added to or subtracted from. Like how an item belonging to you in online games like Metin 2 has a special ID, you can't add or remove anything from that item. Sometimes it even burned while trying to improve it. The NFT ERC-721 network is like this. They were unique products that were not similar to each other and were unique on the network until the ERC-1155 standard. This is one of the reasons why NFTs are so important in games. You're going to buy a ship in the game, but that ship needs defense cannons and cannonballs for these cannons. There needs to be more than one of these. That's why the ERC-1155 network comes out, and you can produce as many unique tokens as you want.

NFTs are proof of purchase of an asset. They are not the asset itself. This means you can create an NFT from almost anything. You're not limited to digital objects; you can use a digital object to represent a tangible item. The deed to your house, ownership of a solitaire diamond, a product in a game, and much more...

Blockchain
So what is Blockchain, which forms the basis of all these things and is built upon? It's defined as a peer-to-peer network that works by recording and distributing immutable data. Whatever you do on the blockchain is completely recorded and visible to everyone. That's why NFTs are quite satisfactory in terms of trust. You can see the people who bought and sold the product you're going to buy in its history.

So how can we buy NFTs?
They can be bought on Opensea, Rarible, AtomicMarket, or Binance. On these platforms, a percentage can be set to be given to the producer as a royalty fee for each sale.

The other thing needed to buy NFTs is a wallet. But this is not a real wallet. Cryptocurrencies are stored on the blockchain. There are no electronic and cryptographic coins in exchanges, wallet applications, or hardware wallets called cold wallets.


Just as I wrote before that NFTs are not proof of purchase of an asset, not the asset itself, there is no such thing as cryptocurrency in wallets. Coins are always within the blockchain. The wallets we own carry the right to use these coins on the blockchain. By solving cryptographic codes, it gives the authority to spend the coin as a reward. This is provided by digital signature. A wallet is what holds the signing authority to spend a certain coin.

I'll talk about crypto wallets in more detail later, so I'll end it here for now. However, I think NFT projects will create much more hype soon and we'll see very different things. As someone involved in a few nice projects, I must say I'm excited.

I wish everyone a good weekend.