A couple of years ago, the crypto industry experienced a real boom in transactions with NFT tokens. It’s not surprising that these tokens are currently attracting increased attention, with journalists, bloggers, digital artists, and investors actively engaging with them. What is this technology, and what are its strengths and weaknesses?
NFT stands for Non-Fungible Token, where the term “Fungible” is used as an economic term representing interchangeable goods that can easily replace each other. Applied to tokens, “Non-Fungible” denotes their uniqueness and non-interchangeability.
The essence of NFT is best illustrated with a specific example. Suppose you walk into a sports store to buy a soccer ball. In the corresponding section, there are dozens of absolutely identical sports balls. Buying any of them gets you the required item, which can be easily replaced with another identical one. However, on the shelf nearby, there’s a ball signed by Cristiano Ronaldo. Thanks to this autograph, the sports ball becomes unique and irreplaceable.
Similarly, with NFTs — it’s a part of the blockchain (a token) that holds an immutable record of the history of buying and selling a unique, non-repeatable digital object, specifying royalties and ownership restrictions.
The hype around NFTs has solid foundations. Considering that tokenization can be applied to almost any digital object, gamers were the first to establish a sustainable demand for transferring ownership rights to digital assets. The NFT technology provided them with the opportunity to buy and sell various items and objects existing in gaming worlds, with or without the consent of developers.
NFTs have all the elements to become the foundation of metaverses — digital realms functioning on the blockchain, allowing unlimited possibilities for social and economic interactions among users. In this context, NFTs play a crucial role as tools for conducting cross-chain operations. Looking at the Avatr project from this perspective, NFTs offer unique opportunities to their holders, such as membership, enabling advancement, development, the discovery of new possibilities, and a deeper immersion into Avatr with each step!
