what is a non-fungible token and what is it used for?

NFT is the new buzzword. Popular in 2021 with cryptocurrency enthusiasts, non-fungible tokens are entering other sectors, including video games. We tell you everything you need to know about this controversial technology.

Since the beginning of last year, we often hear about NFT. Regularly, celebrities invest colossal sums in what are all too often presented as simple JPG images representing computer-generated characters. E.g, the famous rapper Eminem bought an NFT from the Bored Ape Yacht Club collection for a sum of $ 450,000.

Presented as simple images sold at a high price, NFTs can make you smile. Despite the strong media coverage of the phenomenon, many internet users struggle with that understand the interest in NFTs, and the underlying revolution that accompanies them and which prefigures the future of the Internet (the famous Web 3.0). We take stock of this abstract and thorny topic below.

What is a NFT (non-fungible token)?

NFT is the abbreviation for “non-fungible token” or “non-fungible token” in French. One thing is said to be fungible if it can “replaced by things of the same kind, of the same quality and of the same quantity”, Larousse explains. Among exchangeable assets, we find the money. A 1 euro coin can be replaced by a 1 euro coin. Similarly, one Bitcoin can be exchanged for another Bitcoin.

NFT

On the other hand, a so-called non-fungible asset cannot be replaced by another element. It’s unique. In the same way that a work by Leonardo Di Vinci, Monet or Picasso is unique, an NFT is unique. Its unique character is easily recognizable. Note, we often talk about NFT to describe visual works (the famous JPGs as mentioned above), but it can also be a musical work, a movie or a script, or the code for a computer element. For example, the first SMS in history was digitized as NFT and sold to the highest bidder. The World Wide Web source code was also auctioned off as NFTs along with the front page of Wikipedia.

NFTs also promise to be crucial in the metavers of the future. Non-fungible tokens can also allow exchange of digital real estate in virtual spaces as Decentraland or Sandkassen. A piece of virtual land in the form of NFT was also sold last year for $ 2.4 million.

To certify the uniqueness of an NFT, it must be so digitized and registered on blockchain. Currently, a large proportion of non-fungible tokens are registered on the Ethereum blockchain. In the origins of most cryptocurrencies on the market, blockchain is a decentralized ledger that keeps track of everything entered into it. Unlike a more traditional database, blockchain, or the chain of blocks in French, is immutable, immutable and inviolable.

When you create an NFT, all data for a work will be digitized and entered into the blockchain. A non-fungible token can contain a large amount of information. Technologies also make it possible to combine a wealth of data, from images to lines of code, including video. Once registered in the blockchain, the work will be accompanied by a digital certificate of authenticity. This certificate guarantees that the Internet user in its possession is in fact the sole and unique owner of an NFT.

Once it is digitized on the blockchain, the history of the work (purchase, resale, creation date, name of the creator, etc.) is recorded forever. That’s why auction houses specializing in art, such as Christie’s or Sotheby’s, quickly acquired the technology behind NFTs.

Where to buy NFTs?

There are many platforms to buy and sell NFTs. Among the most popular sites are OpenSea, Foundation, Ethernity or Rarible. Many cryptocurrency exchange platforms have also embarked on NFTs by offering their users to buy or sell them through their interface. This is especially the case with the essential Binance, the service that allows you to trade cryptocurrencies.

As explained above, there are many platforms for creating an NFT. For convenience, we will focus on the method to follow on OpenSea, which is by far the most widely used platform in the industry. Before you start, make sure you have an Ethereum wallet like Metamask on hand. To open a wallet, simply install the Metamask app on your smartphone from the Play Store or App Store. You can also install it as an extension on your Chrome web browser.

We explain how to create (“mints”) a non-fungible token in a few steps:

  • Go to the OpenSea website or download the app from the Play Store or App Store
  • Press the button cabinet at the top of the interface
  • Then select Metamask from the offered digital wallets
  • Once the wallet is connected, click My Collections
  • Create a collection of works by clicking cabinet
  • Once the collection is created, select a logo for it by following the on-screen instructions
  • Finally press Add item.
  • Choose Add new item
  • Approve the connection with Metamask
  • Follow the instructions on the screen and drag the image into the frame designed for this purpose
  • click on cabinet

Be careful, if you then want to sell your NFT, you will have to pay a small amount of money in cryptocurrency (Ether). To offer your work for sale, you absolutely must pay ethereum network fees. This amount can sometimes be quite hefty depending on the congestion of the network.

Are you going to invest in an NFT?

Holders of a non-fungible token do not hesitate to present these as excellent investments. By speculating in the price of certain flagship collections, some internet users manage to get rich or at least make impressive profits in cryptocurrencies.

Banksys fake NFT
Credit: Internet Archive

However, it should be remembered that it is not as easy to make money on NFTs as one would like to believe. The price of all digital works does not increase automatically. By investing in an NFT you always take the risk of not regaining your original bet. For one reason or another, the price of the property may fall and never rise again. This applies to NFTs, cryptocurrencies, stocks or real estate.

Why do NFTs so often arouse distrust, especially among players?

Many video game publishers protested their interest in NFTs. More and more studios want to offer skins or items in the form of non-fungible tokens to their players. In December, Ubisoft also announced the launch of Quartz, a platform for acquiring NFTs. This platform offers non-fungible tokens for use in the game Ghost Recon Breakpoint.

This initiative caused players’ anger. Faced with criticism, Ubisoft was forced to remove the presentation video from its YouTube channel. Many players actually summarize NFTs for speculation and trading in digital works and believe that publishers are simply trying to get rich on their backs. Also, some video game fans are pointing the finger energy consumption colossal number of cryptocurrencies and blockchains enabling the exchange of NFTs. By adopting NFTs, they believe that publishers are endangering the environment.

Under these conditions, they have a very weak view on the implementation of NFTs in their favorite video games. The fierce criticism of NFTs has already caused several companies in the sector to change their minds. This is especially the case Disagreement. The popular messaging application among gamers has finally chosen not to add NFT support to its platform following calls from the user community. After all, many companies, including Square Enix, continue to proclaim their interest in the technology.

After all, by mid-2022, the popularity of NFTs is very clear at half-staff. The many controversies they provoke, combined with the dizzying decline in cryptocurrencies over several weeks, have cooled investors. Result: NFT searches collapse on Google by 75%. The craze seems to be over: Internet users are no longer interested in non-fungible tokens.

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