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, Author: IOSG Ventures, reprinted with authorization by Odaily.

So the question is, what exactly is NFT? How does it work? What applications are there now? Should we care about it? Read below and you may find the answer.

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The concept of "non-homogeneity" and its relationship with NFT

Technical understanding:https://eips.ethereum.org/EIPS/eip-721& https://eips.ethereum.org/EIPS/eip-1155Non-homogeneous tokens follow the Ethereum ERC721 and ERC-1155 token standards (

), each NFT under this standard is unique and non-interchangeable.

Non-technical understanding:

Alice and Bob can exchange $1 bills with each other, the combined result is 0, and the bills are interchangeable (homogenization). Fiat currencies are designed to be fungible from the very beginning. In a barter system, exchanging one potato for another is fungible (substitutable).

Alice and Bob swap da Vinci's Mona Lisa for Monet's Water Lilies, and even though the two works of art have the same price, they are not interchangeable in value (non-homogeneous/ irreplaceable), they are not interchangeable with a comprehensive result of 0. This is non-fungibility - they have the same price in fiat currency (USD), but they all have a uniqueness that cannot be copied, which is unique to the work.

Further, "Alice and Bob exchanged Da Vinci's "Mona Lisa" and Monet's "Water Lisa"" and "Alice and Bob exchanged Zhang Sansan's corn and Li Siyang's beef", meaning It's completely different. The difference here is that commodity trading is established in the relationship between supply and demand of human survival necessities in ancient and modern China and foreign countries, while art trading does not operate in this relationship. Through the collection and trading of artworks, it attempts to establish Agency-oriented symbolic value. Every art transaction is unique, and the price parity can only be used as a reference anchor for the market, but the comparison in "value" is meaningless, and there is no K-line for art to see (quote xy studio )

From a sports analogy:"Ronaldo scored 3 goals in a 3-2 game. The last goal is the highest value goal because it is", which gives it unique properties. The value of this goal cannot be exchanged for value with his first or second goal.

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How NFT works

NFTs are the tokenization of a non-fungible (non-fungible) underlying asset, which can be almost anything - artwork, music, videos, in-game assets, first edition books, etc.

• At IOSG, we classify NFTs as:

• Non-functional NFTs

Functional NFTs

Non-functional NFTs have a store of value and typically cannot be interacted with/interacted with by users except for exhibiting or trading in virtual galleries.

These are often referred to as NFTs that represent digital art, music, video, and/or other forms of content or memorabilia whose algorithmic content is created by a group of artists who have a template of properties to refer to: eyes, backgrounds, and facial expressions, among others. These characteristics are fed into a random number generator, which produces multiple different NFTs with different characteristics from different artists. These characteristics vary in degree of scarcity, thereby defining the uniqueness of the NFT piece, and therefore its value.

Functional NFTs feature gamification or interactivity. Cryptokitties, Axies, Illuvials, etc. are examples of functional NFT assets that are also tradable.

Most functional NFTs are game-based and will provide interactive functions with users such as "breeding" or "nurture". NFTs are typically in-game assets that players typically buy, breed, and then sell. Players have a higher level of engagement in the process and generally have a greater attachment to these NFTs.

In summary, NFT functional (Actionable NFTs) and non-functional (Non-actionable NFTs) correspond to game assets and collection assets respectively. The essence of "interactivity" provided by the former to the owner is a kind of production material that is "consumed" within the rules, while the latter maintains the mysterious integrity of a "work", and the corresponding value of the two The attributes are also different (quote xy studio).

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Do you want to mint your own NFT?

As an artist, you can mint your own NFTs through several platforms. Some of them are curation platforms, and they have dedicated artist management teams. Artists can list their works and have a dedicated curatorial team to serve them. The curatorial team is responsible for performing due diligence on the artists and is tasked with ensuring that buyers and collectors are purchasing reliable works by artists that are most likely to appreciate in value over the long term.

Other platforms like Rarible and Mintbase allow anyone to mint their own NFTs. But currently, the high gas fees associated with minting NFTs is one of the biggest problems encountered by artists who want to mint NFTs and sell them at a low price.

In the past few months, NFT has received a lot of attention, and NFT projects are also increasing. New NFT markets, NFT collection items, and NFT-based game items are emerging one after another. And some time ago, Hashmask, a digital art collection project that was popular in the circle, and its creative concept of NFT+blind box+mining, also earned a lot of attention, constantly arousing the public's Fomo emotions. Because its NFT works are not simple collectibles, and buyers have absolute naming rights to their unique names. The buyer actually becomes part of the art.

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Well-known NFT market historical data