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NFT Cryptocurrencies: The Next Big Thing in Crypto Markets

June 30, 2022
NFT cryptocurrencies.
Photo caption: NFT cryptocurrencies.

In the crypto markets, cryptocurrencies are the new vogue. Following Bitcoin, most investors began exploring for other coins that could provide them with similar benefits. The majority of these cryptocurrencies were created in this manner. Many more virtual currencies have been developed since then, as well as many more that have departed the market. Some have gone unnoticed, while others have grown in popularity, leaving other cryptocurrencies in the dust in terms of market valuation.

However, the cryptomarkets are currently experiencing difficulties. Prices are falling, with some coins losing as much as 90% of their value since the start of the year. This has dampened investor enthusiasm a little bit and we can’t be sure if this is just a temporary setback or if this is something that we might continue seeing in the coming months or even years if things don’t improve soon.

In any case, there is no denying that new cryptos are emerging at an alarming rate right now- it seems like every single day there’s another one coming out! And these new entrants aren’t just playing catch up either; they’re bringing something totally new to the table that we haven’t seen before: NFT (Non-Fungible Token) Cryptocurrencies!

What are NFT Cryptocurrencies?

NFTs are blockchain-based coins that allow for the production and transfer of unique assets. Assets can be represented, transferred, and traded as escrow assets using unique IDs and attributes. Collectibles, real-world commodities, digital assets, and even derivatives like futures are examples of assets with unique IDs. NFTs are distinct in that they are decentralized and lack centralized storage.

NFTs, like other cryptocurrencies, are used to trade money or value. Fungible tokens, like fungible assets, can be traded between different parties. Because fungible tokens really aren't unique, they can be bought and sold several times. This is a significant distinction between NFTs and other digital currencies.

Why are NFT Cryptocurrencies so important?

Non-fungible assets (NFAs) are a novel and innovative approach to store and transfer them. Art, exotic automobiles, real estate, and even financial assets like futures and bonds can all be stored in them. Non-fungible asset management can be substantially cheaper and more efficient with NFTs. It used to be difficult to handle and track a collectable item like a rare toy or a collectible car. With the use of blockchain, you can now easily handle the asset's ownership, transfer, and protection.

NFTs have the potential to promote transparency and enable complete asset responsibility. This is due to the fact that information on the asset can be kept on the blockchain and checked by anybody. This information can be utilized to prove the origin, ownership, and status of the assets. This can significantly increase the asset's value while also lowering the chance of fraud. You may evaluate how much your asset is valued and prove ownership with the use of unique identifiers and properties.

How to create a Non-Fungible Token (NFT) in Ethereum

You can create an NFT in two ways in Ethereum: 

  • Centralized NFT Creation: You can create an NFT in a centralized fashion with the help of an Ethereum smart contract. The contract manages the creation of the NFT and its associated tokens. 
  • Decentralized NFT Creation: Alternatively, you can create an NFT on a decentralized platform like Ethereum’s decentralized exchange, IDEX. Both centralized NFT creation and decentralized NFT creation have some advantages and disadvantages. While centralized NFT creation is less resource-intensive and easy to manage, decentralized NFT creation is cheaper and more decentralized.

ERC-721: The Standard for NFTs in Ethereum

ERC-721 is a standard for non-fungible tokens built on top of the Ethereum blockchain. The standard is designed to help users create non-fungible tokens on the Ethereum blockchain with just a few lines of code. In order to create an ERC-721 token, you first need to define a digital asset. For example, you could create a token representing a rare toy or an exotic car. Next, you need to define the asset’s ontology. This ontology can be used to describe the asset such as the asset’s identifier, condition, or ownership. Once you define the ontology of your asset, you can create the actual tokens. 

ERC-721 defines three types of tokens: 

  • Ownership tokens: The asset owner should own the token and can transfer it to others. The ownership token can also be traded back and forth. 
  • Fungible tokens: These tokens have similar characteristics to other tokens like Ethereum and can be freely traded between different parties. 
  • Non-fungible tokens: The non-fungible tokens have unique identifiers like a toy’s serial number or a car’s VIN number.

ERC-1155: A New Standard for Non-Fungible Tokens in Ethereum

In July 2018, the Ethereum community decided to upgrade the ERC-1155 standard. The upgrade brings a number of significant changes to the standard and makes it suitable for creating non-fungible tokens. New features of the standard include improved performance, ease of use, and reduced costs. ERC-1155 also brings support for the new Bancor Protocol, which is a decentralized exchange for non-fungible tokens. Bancor Protocol is a standard for creating decentralized exchanges.

ERC-1155 tokens can now be easily integrated into the Bancor Network, which democratizes access to liquidity for these tokens. Bancor is an open protocol that makes it easy to create your own fully-functioning decentralized exchange. The exchanges don’t have to be built on top of the Bancor Protocol, though. You can easily add Bancor integration to your own exchange. Bancor’s decentralized liquidity network enables you to easily manage and distribute the liquidity of your non-fungible tokens.

NFT cryptocurrency market.
Photo caption: NFT cryptocurrency market.

The future of cryptocurrency markets is bright, but navigating the rough waters will be difficult for some investors. Volatility in these markets will continue to be fueled by regulatory uncertainties around cryptocurrencies. The long-term worth of these digital assets, on the other hand, is difficult to dismiss.

With a large amount of new money entering the market each year, the future of cryptocurrency investment looks bright. However, navigating turbulent waters will be difficult for some investors. Because regulatory certainty is still absent in many countries, the bitcoin sector is rife with scams. To avoid being duped, familiarize yourself with the red signals of a fraud operation. For example, any project that demands your personal information for no apparent reason should be avoided.

Other red signs to be aware of include arbitrary deadlines, excessive funding requests, and requests for money to transport a product that has not yet been delivered. Another NFT scam to be aware of is when you are offered a percentage of a future project that has yet to be launched. The reason you can expect to be scammed out of your money is that the project has not been officially announced yet. You might even receive an email that looks like it has come straight from the company itself. Another red flag to look out for is when you receive a request for a significant investment of money.

Since the NFT industry is somewhat unregulated, there are a lot of opportunities for deception. Putting big sums of money into NFT is not a good idea. Last but not least, you should always read the terms and conditions before signing up for an NFT project. We can all agree, however, that the best way to respond is to conduct research and develop sound investing ideas. With this in mind, you should not sell your tokens unless you fully comprehend their long-term value.

It's important to remember that tokens are a type of investment. As a result, you should make every effort to maximize your profit. To do so, you must first grasp the market's fundamentals. You should also explore the finest strategies to invest your money. You can make a lot of money with little risk if you have the appropriate information and plan.

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