The full name of NFT in English is Non-Fungible Token, which is translated into Chinese as: non-fungible token, which has the characteristics of indivisibility, irreplaceability and uniqueness.

On the blockchain, digital cryptocurrencies are divided into two categories: native coins and tokens. The former, such as the familiar Bitcoin and Ethereum, have their own main chain and use transactions on the chain to maintain ledger data; tokens are attached to the existing blockchain and use smart contracts to record the ledger, such as the tokens issued on Ethereum. Tokens can be divided into two types: homogeneous and non-homogeneous.

Fungible tokens, or FT (Fungible Token), are tokens that can be replaced with each other and can be split almost infinitely. For example, there is no essential difference between a Bitcoin in your hand and a Bitcoin in my hand. This is homogeneity, that is, a homogeneous coin.

Non-fungible tokens, or NFTs, are unique and indivisible tokens, such as CryptoKitties and tokenized digital tickets. They are equivalent to RMB with numbers. There will not be two RMB with the same number in the world, nor will there be two exactly the same NFTs.

Therefore, compared to FT, the key innovation of NFT is that it provides a method to mark the ownership of native digital assets (that is, assets that exist in the digital world or originate from the digital world), and this ownership can exist outside of centralized services or centralized libraries.

Ownership of an NFT does not prevent others from inspecting or reading it. NFT does not capture information and hide it, but captures information and then discovers its relationship and value to all other information on the chain.

At the same time, due to its non-homogeneous and indivisible characteristics, NFT can be bound to some commodities in the real world. In other words, it is actually a digital asset issued on the blockchain. This asset can be a game prop, digital artwork, ticket, etc., and it is unique and non-replicable. Since NFT has natural collection attributes and is easy to trade, crypto artists can use NFT to create unique digital artworks.

How did NFT come into being?

The birth of NFT is based on a pixel avatar project called CryptoPunks in Ethereum in 2017. The total number of these pixel avatars is capped at 10,000, and no two characters can be the same. Anyone with an Ethereum wallet can receive them for free, and then trade them on the secondary market.

Six months later, the blockchain game Cryptokitties quickly became popular. It is a cat-stroking game on Ethereum.

Cryptokitty is a virtual cat. If the buyer owns two or more, they can breed new cats. The price of breeding cats with rare characteristics will be higher.

After experiencing several rounds of price surges and plunges, this virtual cat has also made NFT known to more people.

The starting point of Cryptokitty design is to popularize the gameplay of NFT. As a result, people opened zoos on the Ethereum blockchain, virtual rabbits and virtual dogs became popular one after another, and later virtual trees were also created. Mining, buying cats, selling cats to earn coins to buy mining machines, and then mining, may be a new lifestyle in the virtual world.

Don’t underestimate MyCats. The market generally believes that MyCats is a revolutionary game for the proposal and practice of NFTs - value can not only be carried through cryptocurrencies, but also in another new and unique way.

Many people have begun to pay attention to NFT.

On March 6, Twitter CEO Jack Dorsey appeared to want to sell his first tweet from 2006 as a non-fungible token (NFT).

On the afternoon of March 6, Dorsey posted a link to the platform "Valuables". When the page was opened, his first tweet "just setting up my twttr" published in 2006 was being auctioned on it. The highest bid came from Sina Estavi, CEO of digital currency trading company Bridge Oracle, who bid $2.5 million on the afternoon of March 7.

Previously, NFT also attracted the attention of Catherine Wood, the queen of the bull market. She said she was very excited about NFT.

In the American art circle, more and more mainstream artists have already linked their works with NFTs.

Last month, Mike Shinoda, the founder and co-lead singer of the American band Linkin Park, auctioned a piece of music he produced as an NFT, which was eventually sold for $30,000. Shinoda used the funds from the auction to establish a scholarship to support art students with financial difficulties.

NFT applications have now also entered the NBA, where they are used to purchase famous highlights from iconic basketball games, such as LeBron James’ slam dunk.

What are the advantages of NFT?

When an artist wants to sell a work, they create or “mint” an NFT, which from that point on serves as a claim to ownership of the work.

NFTs are registered on an open blockchain ledger, making it possible to track ownership (or “provenance” as they say in the real world), previous sales prices and the number of copies in existence. The security provided by blockchain technology means that selling fake tokens is virtually impossible.

What are the advantages for artists and a large number of self-media to start getting in touch with and using NFT?

ARK wrote in a recent opinion piece:

Today, to monetize digital content, content creators can upload it to Instagram, YouTube, TikTok, Spotify, or other social media platforms. These centralized platforms then monetize the content through advertising or subscriptions, paying content creators a percentage of the profits.

In contrast, digital creators can monetize their followings directly through NFTs, selling unique digital content without the need for intermediaries.

In other words, nowadays, if musicians want to release new songs, they must go through record companies, and a large part of the profits must be given to the record companies; if they publish their works on short video platforms, they will eventually attract advertising and subscriptions, but in the end the creators will not get all the profits, as the platform will definitely take a not low percentage of the profits - the same situation also occurs in other art and creative fields.

However, in ARK's view, if NFT becomes popular in the future, creators will not have to let the platform take a cut. As long as their works make money on the blockchain, they will pocket the money.

Will NFT have wider applications?

In addition to artistic creation, in what other fields can NFT be used?

There are many areas where it can be applied.

First, it may be in the field of intellectual property. NFT can represent a painting, a song, a patent, a video, a photo, or other intellectual property. In this field, NFT plays the role of a patent office: helping each unique thing to register copyright and identify patents.

Second, physical assets. Real estate such as houses and other physical assets can also be represented by NFTs and tokenized. They can be used in financial markets such as asset circulation.

Third, records and identity proof. NFT is unique, so it can also be used to verify identity and birth certificates, driver's licenses, academic certificates, etc. These can be safely stored in digital form to prevent abuse or tampering.

Fourth, financial bills. Various financial bills carry a lot of information during circulation and trading. If combined with NFT, it can not only confirm ownership, but also facilitate tracking. In addition, the future trading of various NFT assets can itself form a segmented financial market.

Finally, ticketing. Concert tickets, movie tickets, drama tickets, etc. can all be marked with NFTs - tickets that look the same actually have different seat numbers, so NFTs can naturally be used here. All tickets are the same, but the seat numbers are different.

What do you think of the NFT craze?

Nowadays, relatively mature exchanges that trade digital currencies such as Bitcoin have begun to launch "spring layout" and actively deploy NFT.

At present, traditional centralized digital currency exchanges such as Binance, KuCoin, Huobi, OKEx, MXC, and Bittrex have begun to participate in the layout of NFT projects.

In fact, since most users are not familiar with on-chain operations, the threshold for trading NFT assets is relatively high.

In addition, the current NFT is mainly issued, traded and circulated based on the Ethereum network, but the Ethereum network is congested and the handling fee is high, which restricts the further development of NFT. At present, the application field of NFT is still relatively single, concentrated in the niche circles such as games, encrypted artworks, and card collections, and has not yet achieved large-scale application landing.

Lu Jun, a senior researcher at Huobi Research Institute, believes that NFTs have typical problems of early products in the crypto world, such as being prone to creating bubbles.

However, Lu Jun also pointed out that time is the biggest enemy of bubbles. As the market develops and people become more aware of NFTs, it will become difficult to generate large bubbles. The problem of liquidity is similar. When people's expectations of the value of NFTs gradually become stable and the risk of holding NFTs decreases, more people will join the market to contribute liquidity.