NFT Labs：17 Quick Questions and Answers about NFTS

17 Quick Questions and Answers about NFTS

Question 1: What is NFT？

The full name of NFT is Non-Fungible Token. Unlike the fungible form of Bitcoin, the characteristics of NFT are unique. It is a unique and easy-to-verify digital asset that can represent assets such as GIFs, pictures, videos, music albums, etc. In fact, everyone may have known about NFTs a long time ago. For example, in 2017, the popular game, CryptoKitties, paralyzed the Ethereum network. The price of an NFT kitty was as high as 600ETH. And the recently famous NBA Top Shot is also a good example.

Question 2：What are the characteristics of NFT？

The properties of NFTs make each NFT unique and authentic, which solves a big problem in the art and luxury industries. For example, LV is preparing to launch NFTs to prove its luxury goods or to track a unique handbag's life cycle journey.

Another feature is that ownership belongs to the user. In traditional games, for example, the player doesn't own anything in the virtual world. However, in blockchain games, the assets in the game are owned by the players. Even if the game is down or the server is shut down, the players still hold NFT assets, which can be converted into tokens for use in other games.

In theory, anything that exists online can be purchased as an NFT. NFT is “a cryptographic token.” Ryan Duffy, the author of Emerging Tech Brew, explained that the most significant difference between NFTs and

cryptocurrency

is that NFTs are non-fungible. They are not interchangeable or divisible. Think of Pokemon cards. While each card can be traded, they are inherently different, and by comparison, one bitcoin is essentially the same as another and is interchangeable.

Question 3： Why should we have NFT？

One of the reasons for buying NFTs is their sentimental value. In this respect, NFTs are not much different from physical objects unless the buyer is a complete utilitarian who only cares about the material value of the commodity. In real life, no one buys lip gloss out of pure necessity, and everyone accepts it primarily because of the joy that lip gloss brings to them. The same goes for GIFs, pictures, videos, or other digital assets. Another great reason to buy NFTs is that there is room for appreciation, and you can make more money by buying and reselling NFTs.

Question 4: How to buy NFT？

This process varies depending on the platform used, and there are many NFT trading markets on the market, such as OpenSea, KnownOrigin, Rarible, and more. On Top Shot, for example, you need to sign up to join a waiting list that may already have thousands of NBA fans. When a digital asset goes on sale, you are randomly selected to buy it. Top Shot accepts U.S. dollars and cryptocurrencies, While some platforms like Opensea only accept cryptocurrencies.

In general, there are four standard methods:

1. Buy potential NFT tokens on significant trading platforms;

2. Buy and sell NFT assets;

3. Become a crypto artist and issue your own NFT;

4. Pledge NFT liquidity mining.

Buying tokens of the NFT concept and buying NFTs are two different things. If you want to simply invest in the NFT, you can purchase top NFT tokens on significant exchanges, such as ENJIN, MANA, SAND, etc.

Suppose you want to participate in the NFT collectible market or buy and sell NFTs to earn the difference. In that case, a general NFT marketplace like OpenSea provides a channel to purchase various NFT assets. Additionally, there are NFT platforms dedicated to crypto art, such as SuperRare and Nifty Gateway. If you want to know more about how to use the forum, you can add researcher Sophia (ID: lovebit98) to ask.

Question 5: How to participate in NFT liquidity mining？

There are many NFT projects combined with liquidity mining, such as Aavegotchi. Users can mortgage Aave's tokens to get ghost-image NFT tokens, and the collateral behind this NFT token is an interest-earning token.

On Aavegotchi, users can obtain small ghost images by pledging a token (the equity token on Aave), and each small ghost is an NFT token. What is unique about Aavegotchi is that the collateral behind the little spirit, the token, is an interest-earning token, and the value of the collateral grows over time.

Question 6: How to determine if the purchased NFT is real？

The ownership of NFTs is recorded on the blockchain, which is decentralized and exists in encrypted form on many people's computers. To avoid buying counterfeit products, you should check the source of NFT when you buy them. Taking OpenSea as an example, whether the NFT you intend to buy comes from the platform's official store opened by the project. Generally, popular projects will be officially certified by OpenSea. Secondly, you can also find out which project or which artist the NFT you want to buy comes from through social media. The project party and artist usually choose to promote it on social media, and everyone can buy from the link they share.

Question 7: Are NFTs new？

NFTs have exploded recently, but they are not new. According to Andrew Steinwold, the origins of NFTs can be traced back to the Blockchain-backed Colored Coins in 2012, and the CryptoKitties craze in 2017 led people to rush to buy CryptoKitties, and NFTs really became mainstream.

Question 8: What are the application scenarios of NFT？

“Everything can be NFT.”

The application range of NFT is also comprehensive. We know that most assets in the real world are non-fungible assets. Suppose these assets are to be listed on the chain or to find the corresponding digital form. In that case, NFT will be the most suitable standard, so we firmly believe this is the second largest application scenario outside of finance for the blockchain.

NFTs can be applied to digital artworks, collectibles, in-game items, virtual worlds, sports competitions, fashion entertainment, identity verification, insurance, infrastructures such as domain names, digitization of physical assets, e-tickets or coupons, and other application scenarios. Games and digital art can be said to be the two main application scenarios of NFTs.

NFTs based on blockchain technology can record the status and achievements of players in the game. In-game items such as weapons, equipment, characters, etc. can become NFTs, and NFTs can ensure the ownership verification and authenticity of game items. CryptoKitties, Axie Infinity, and Aavegotchi are all gaming use cases for NFTs.

Digital art is another mainstream application of NFTs. Artists can ensure their copyright to work, buyers can verify the authenticity of the purchased artwork, the intervention of middlemen is no longer required, and encrypted artists can earn more income. SuperRare, OpenSea, and MakersPlace, among others, are crypto-art use cases for NFTs.

Question 9: Are there any specific practical cases for NFTs in the game field？

Take the NBA TOP Shot as an example. NBA TOP Shot is a trendy NFT card game recently.

The reasons for the popularity of the NBA TOP Shot game can be divided into three parts.

(1) One is the aggregation of sports fan effect + digital collectibles. The cards are mainly the iconic actions of NBA star players, which is very attractive to the audience, so, naturally, such a digital version of the star card is popular. Since these star cards are all sold in limited quantities, teams with more significant numbers of fans, such as the Lakers, and highlights cards of famous stars such as James and Curry are generally more expensive.

(2) The second is the trust endorsement of Dapper labs, the same team of CryptoKitties.

(3) The third is the emotional push of FOMO. In fact, this is the commonality of digital collectibles - the sooner you enter the market, the more profitable it will be. For example, some football cards priced at only $230 will be sold for around $100,000.

Flow, also developed by Dapper labs, is also prevalent recently. It is a public chain specially created for the entertainment and cultural industry.

This collectible project is currently an NFT investment direction, and general projects will use the scarcity of NFT + fan effect to attract audiences.

Question 10: How to purchase NFT encrypted artwork？

NFT art trading platforms include SuperRare, MakersPlace, and Known origin. The intervention of middlemen is no longer required, and encrypted artists can earn more income.

You can click this article for those who want to buy NFT artwork but don't know which platform to buy. This link analyzes six popular NFT trading platforms, such as the types of collectibles traded on the forum and the comparisons of features and commissions.

Question 11: What are the leading NFT platforms？

OpenSea is currently the world's largest NFT trading platform, established in January 2018. It covers various NFT categories, integrates NFTs from multiple platforms, and sells them at more favorable prices. It is currently the most used trading platform for mainstream NFT players. In terms of transaction volume, OpenSea ranks first.

Rarible was founded in 2020 and released the governance token RARI on July 15th, allowing the most active creators and collectors on Rarible to vote for any platform upgrade and participate in governance and auditing. There are 6932 collectors on the platform, which can be regarded as a mainstream trading platform. When it comes to the number of traders, Rarible maintains its lead.

SuperRare specializes in trading those ultra-rare artworks. This is an NFT marketplace for selling unique digital paintings. The platform is characterized by advanced management, convenient experience, flexible payment methods, social profiles, and a mobile APP enabling real-time auctions.

Question 12: What are the NFT standards？

Different blockchains have their own NFT standards. On Ethereum, common NFT standards include ERC 721, ERC 1155, and ERC 998 protocols, while SimpleAssets and AtomicAssets protocols are standard on the WAX. Among them, the most common standard for non-fungible tokens is ERC 721. CryptoKitties, founded in 2017, was once the first-star project of NFT, but many people do not know that the ERC 721 standard is precisely what the project CTO Dieter Shirley created. Created and published, it can be said that Dieter Shirley is one of the founders of NFTs.

Question 13: What tokens does NFT have？

Many NFT projects have launched their own native tokens. For example, MANA is the token of Decentraland, and Flow is the token of the NFT public chain platform launched by Dapper Labs.

In addition to holding the currency for the rise, some NFT tokens can also be used to purchase land, goods, and services in the virtual world and pay platform fees. Rarible's RARI token can be used for governance, management, and voting on featured artworks.

Question 14: How is the trend of NFT tokens？

In the previous round of plummeting, sharply dropping from $58,000 to less than $45,000 on Bitcoin, many other crypto tokens such as sushi, uni, and link are also widely affected. Several coins with the smallest decline and the fastest rebound in this round of plummet are coins with the NFT concept. To give a few examples, from Sophia's own purchase of MANA for 5 cents last year, it has increased more than 10 times now.

Question 15: How to create your own NFT？

Some NFT creation platforms aim to make it easy for anyone to create NFTs, regardless of whether they have the development skills to deploy smart contracts. The NFT trading market usually provides tools or tutorials to guide users in creating their own NFTs. For example, trading platforms such as OpenSea and MintBase also offer their own creation tools.

For example, Mintabse and Mintable platforms make tools that allow people to easily create their own NFTs. Mintabase creates NFT based on ERC721. The gas fee required to mint NFTs on different platforms ranges from $2 to $32.

The OpenSea platform also supports the creation of NFTs, and it is free, and users do not need to pay fees to deploy smart contracts. Click “Create” in the upper right corner of the website to start creating.

Now, OpenSea has released a gas-free NFT maker, creating and selling NFTs without paying any gas fees.

Question 16: How to evaluate NFT projects？ Is there any reference standard？

(1) The first is the project's quality and the project party's reliability. Because entry for NFT issuance is shallow and it is easy to be imitated and copied, attention to the influence of the issuance team affects the judgment of subsequent transaction potential.

(2) The activity level of the community. NFT is more dependent on market activity than DeFi, so sneaking into the community and observing the discussion of the community is one of the evaluations to indirectly measure whether NFT issuance and trading are likely to be profitable. And it's not enough to compare the number of people in the community. The number in the community is easy to be faked. You should pay attention to the discussion on this in the community.

(3) Market transaction records. These historical transaction data can be found on the Non-fungible website, which is publicly visible. It is worth noting that the evaluation of NFT projects is not based on the platforms' assets for sale because the scarcity and uniqueness of NFTs determine the constantly changing market evaluation criteria for each asset.

(4) Unlike fungible tokens, NFT also has aesthetic judgment requirements. Many shoddy NFT artworks on the Internet need to be identified by yourself.

(5) The scarcity of NFT itself. For example, the total number of CryptoPunks is fixed at 10,000. Unlike CryptoKitties, which can be generated infinitely. As the NFT industry expands, the scarcity of CryptoPunks will make them even more valuable. In the last quarter of 2020 and the first two months of 2021, sales around CryptoPunk have reached tens of millions of dollars.

Question 17: What is the development prospect of NFT？

Non-fungible tokens are quietly gaining popularity in 2020, and there is a lot of room for growth in the NFT market in 2021 as people start to see the potential value and utility of NFTs. Nearly 30,000 respondents believe that NFT is the subsequent popularity after DeFi, and the combination with DeFi will lead to a new wave of NFT. In general, NFT has a bright future. As Google search trends show, interest in NFTs has exploded.