What Are Crypto, NFT And Their Underlying Technology Blockchain?
Crypto was already there but now we see NFT getting a lot of traction. Man! these Blockchain guys keep on releasing new variants regularly like they are competing with COVID variants. DON’T FRET, we’ll help you to understand them.
A Crypto (short for cryptocurrency) is a digital form of currency that is way different from the fiat currency we have been dealing with all our lives. You’ll get way lot of answers when doing a simple google search but I like to put it simply as a means of exchange that is digital and secure. A more technical answer would be that it is a collection of binary data which is used as means of exchange. The collection of binary data is on a network that is made secure, hard to crack and counterfeit using the best cryptographic algorithms known to date. Also, the network that these cryptocurrencies are built on is decentralized and transparent which basically mean that every user on the network, if need be, can access the complete network history to get details about the transactions taking place and thus it becomes harder to cheat on the network when there are millions of active users.
You might have noticed the prime culprit of this whole shenanigan is this network that we hear a lot, it has the name “Blockchain Network”. To put Blockchain as simply as I could, it is a series of blocks grouped together with certain rules. A Block is the fundamental unit of the network which holds the binary information intended for the purpose. Yes, it is true these blockchains can be used for multiple purposes/solutions other than cryptocurrencies, more on that later. To understand in great detail, I have linked a YouTube video that explains the working on blockchain in a simple and complete manner.
Did not watch it? Watch till the 60-minute mark for Blockchain and come back later.
So now you understand, changing the block code or adding malicious data will take a lot of efforts to validate it. Also, you will be competing with other peers in the network who are also validating the network simultaneously. Hence, it becomes almost impossible to misdirect the network and insert inconsistencies, put in simple words cheat.
How does Bitcoin make use of this?
Well, Bitcoin and for that matter, all cryptos have a blockchain network that is decentralized and transparent. They might have different rules and that is what makes them stand out from the rest of the crypto players. When I say transparent, your actual PII – Personal Identification Information won’t be available for everyone to see in the network rather you will sign up on the network via a wallet which will provide a unique cryptographic code that will be your representative in the network. On a side track, the network rewards the member with some BTC for successful validation of a block which is termed mining when dealing with Bitcoin.
One well-known example of a crypto wallet is Metamask.
Well now that you have knowledge about things in detail, where does NFT comes into picture?
NFTs are again a variant use of the underlying technology which is Blockchain. Before I go more in detail, lets understand the meaning of word “Fungible”.
Straight from the dictionary
Fungible – (of goods contracted for without an individual specimen being specified) replaceable by another identical item; mutually interchangeable.
When you look at a Crypto, for example, Luna – it is fungible means that a token of Luna can be easily replaced with another. So, if I trade a coin of Luna with you for another one, the trade won’t make a difference to the net value of Luna that you hold. The monetary value will still be the same.
NFTs on the other hand stand for Non-Fungible Token, implying that they cannot be interchanged. Suggesting, that every individual NFT holds some emotional and monetary value which is unique to that particular token. Mind you these tokens can be anything that can be digitally stored, bought or sold.
Most of the tokens that we see are some forms of digital art but few weeks back we saw that a tweet was sold for millions indicating there are no restrictions to what can be an NFT. These NFTs are traded in new marketplaces which are emerging every day. Once you hold possession of a particular token your transaction of buying that NFT is stored permanently in the underlying blockchain network indicating that the owner of the unique NFT is you.
So there comes the sudden interest of people to convert digital pieces that hold emotional value to monetary by making them an NFT and then selling it onto a marketplace for actual money.
Here’s the list of top 10 expensive NFTs sold.
Watch out for the market, far more expensive items are yet to be sold!
Article by :
Apoorvraj Sharma & Omkar Mindhe