Non-fungible tokens (NFTs) exploded in popularity over the last year. But they aren’t exactly new.
What is an NFT?
An NFT is a digital asset that represents a unique tangible or intangible item where ownership is verified on the blockchain.
When you create or own an NFT, you are the owner of the token that resides on the blockchain. It is completely unique and can be bought or sold on the blockchain. Your private key is used to prove ownership of the NFT.
History of NFTs
In 2012, Bitcoin users started adding bits of metadata to their blockchain transactions and called it “colored coins.” This was the first instance of the so called NFT.
NFTs have been around for awhile but have gained popularity with games such as CryptoKitties, which was the first true working example of an NFT on the Ethereum blockchain.
Using smart contracts on the blockchain, the CryptoKitties are images that are created uniquely and ownership can be verified. With the success of CryptoKitties, NFTs are the norm. Even RadioShack is creating their own DeFi and NFT collection.
In 2018, Major League Baseball partnered with a blockchain developer to offer NFT baseball cards.
The real rally started in early 2021 when the NFT sales were off the charts. The media was a big part of this buying frenzy and helped fuel the fire. A Nyan cat sold for 300 ETH ($580K). A clip of Lebron James dunking sold for $200K. In 2021, an estimated $24.9 billion was spent on NFTs.
What is a smart contract
Smart contracts are code that’s executed on the blockchain network. They are created to manage the tokens created on the blockchain, for minting or other purposes.
Just like any other contract that you would physically sign, a smart contract on the blockchain is the same by laying out terms and agreements of the deal. Running on the blockchain they are more reliable and secure.