- NFTs are unique digital assets - their outside appearance is unique and cannot be broken down into one or more other assets. This makes them very different from almost any other kind of digital asset in existence today. NFTs are a fresh area of tokenization and could change how users view, purchase and exchange digital assets in general.
NFTs are unique digital assets – their outside appearance is unique and cannot be broken down into one or more other assets. This makes them very different from almost any other kind of digital asset in existence today. NFTs are a fresh area of tokenization and could change how users view, purchase and exchange digital assets in general.
There are many ways to invest in cryptocurrencies today. One way is by purchasing them outright. This is done by using the services of an exchange like Coinbase or Binance, which allow you to buy Bitcoin and then use that Bitcoin to purchase other currencies on platforms such as Binance or Kucoin.
A second way of investing is by getting a loan from a bank – either from your own bank, through a peer-to-peer option like Lending Club, or from an online lending platform such as Celsius – and investing what you borrow into cryptocurrencies on a free stock trading app like Robinhood Crypto.
But there’s a third way: minting “non-fungible tokens.”
Minting NFTs involves purchasing a franchise from a fintech company that utilizes the ERC721 token standard to govern the sale of its unique assets. Firms that do this fall into three categories: those that mint collectible NFTs, those that mint unique digital assets, and those that mint unique digital assets which can be used as cryptocurrencies themselves.
The first category, known as “cryptocollectibles,” is perhaps the most well-known form of NFT. Cryptocollectibles include games such as CryptoKitties and CryptoBots, which allow users to buy unique collectibles with cryptocurrency of their choice. The idea is that this virtual asset can be treated like any other type of collectible, like a Beanie Baby or Pokémon.
Cryptocollectibles, however, are actually not the first type of NFT to be sold. The first NFT to be sold were “CryptoKitties,” which launched in 2017. Their value is determined by the number of kittens they represent. CryptoKitties are managed by the Ethereum blockchain and were created by Canadian studio Axiom Zen.
The second type of NFTs sold is unique digital assets – such as CryptoPunks and CryptoCelebrities – which are sold as one-of-a-kind assets and cannot be broken down to represent other assets. This means that the asset’s uniqueness, and its value, is tied to the fact that there is only one of it.
The third type of NFT sold is unique digital assets that can be used as a cryptocurrency themselves. These include MakerDAO’s DAI coin and Havven’s nUSD token. Both of these use their own blockchain systems; Havven uses Ethereum, but DAI has its own blockchain system specially built for it (though it utilizes Ethereum for transaction security). Havven’s nUSD token, for instance, is a stablecoin, meaning that it is pegged to assets such as the US dollar.
What exactly are Cryptocollectibles
Cryptocollectibles are by far the most popular type of NFT issued today. They are unique digital assets, one-of-a-kind, that can be bought and sold by users. The idea is that they can serve as collectibles or game pieces, similar to Beanie Babie or Pokémon cards.
CryptoPunks are unique digital assets – one-of-a-kind – that cannot be broken down to represent other assets. They can be used to complete transactions on the Ethereum blockchain for goods and services just like any other cryptocurrency, but their value is determined solely by their rarity amongst other CryptoPunks rather than the amount of money users paid to get them.
CryptoKitties are another type of CryptoPunk. Like CryptoPunks, they are one-of-a kind, unique assets that cannot be broken down to represent other assets. But they are also similar to CryptoPunks in the fact that the value of a CryptoKitty is determined solely by the number of them in circulation rather than their value in fiat currency. Each cat has a unique digital identity, meaning that they cannot be broken down to represent other assets; each cat can be traded individually, if it’s desired. The gender of the cryptokitty is decided at random.
One of the features that CryptoKitties has is called “breeding.” This allows people to breed two CryptoKitties to birth a new CryptoKitty, which has the genetic makeup of the parents. It can be any gender either or both of them; cats can also inherit traits from their parents (or wear hats, for that matter).
CryptoCelebrities is an asset that falls under this category as well. It was minted by KureCoin in order to allow users to buy celebrities on their platform.
CryptoCelebrities are unique digital assets – one-of-a-kind – that cannot be broken down to represent other assets. They can be used in transactions on the Ethereum blockchain for goods and services just like any other cryptocurrency, but their value is determined solely by their rarity amongst other CryptoCelebrities rather than the amount of money users paid to get them.
Difference between CryptoPunks and CryptoCelebrities
The main difference between CryptoPunks and CryptoCelebrities is that CryptoCelebrities can represent bigger assets than CryptoPunks. For instance, the somewhat famous CryptoCelebrity “Tulip Girl” was actually based on real world tulip that was worth $100 million.
CryptoKitties and CryptoPunks, by contrast, are based on common collectibles and internet memes.
Conclusion
As blockchain technology develops, NFTs will continue to develop to be the digital assets of the future. The approval of ERC721 to become a standard for non-fungible assets will open the door for other companies to create NFTs, which could lead to them increasing in popularity.
Each type of NFT has its own advantages and drawbacks, depending on what sort of investor one is. Cryptocollectibles are an easy way to invest in cryptocurrency, as they are designed to be one-of-a-kind – you can operate on the premise that no two CryptoKitties are alike – but they aren’t necessarily designed to hold any sort of value beyond their individual value.
The popularity of CryptoPunks and CryptoCelebrities amongst users is a clear indicator of the future role that NFTs will likely play in cryptocurrency trading. NFTs will surely become more prevalent, and it’s likely that more specialized types of digital assets will be created over time.
Read more about what NFTs are here.