The non-homogeneous token, or NFT, contains identification information recorded in its smart contract. It is this information that makes each token different, so they cannot be directly replaced by another token.

Encrypted currency, utility tokens, security tokens, etc...Digital assets and their classification are being accompanied by the continuous development of encryption technology and blockchain technology. Non-homogeneous tokens (NFT) were born with the rapid changes in the industry. In this guide, we will explore what they are, how they work, and how they are used.

What is a non-homogeneous token (NFT)

Non-homogeneous tokens contain identification information recorded in their smart contracts. It is this information that makes each NFT different, so they cannot be directly replaced by another token. They cannot be exchanged like other currencies because each NFT is different. The banknotes can simply be exchanged for one, and if their value is the same, there is no difference to the holder.

Bitcoin is a homogeneous token. You can send someone a bitcoin, and they can send one back, which is still a bitcoin. The value may change based on the time interval between exchanges of bitcoins, but it is essentially the same. You can also send or receive less than one unit of Bitcoin, because homogenized tokens can be divided.

Non-homogeneous tokens are indivisible, just like you can't give half of the concert tickets to others. Half of a concert ticket is worthless.

The CryptoKitties collection is the first NFT. Every pet cat based on blockchain is unique. If you send a CryptoKitty to someone and receive a CryptoKitty from someone else, then the CryptoKitty you received will be completely different from the CryptoKitty you sent.

NFTs like CryptoKitty store unique information in their smart contracts and record them on the blockchain of the token, which cannot be changed. CryptoKitties are Ethereum ERC-721 tokens. They use the Ethereum protocol and the Ethereum blockchain.

What makes NFT so special?

NFTs have unique attributes and they are usually linked to specific assets. They can be used to prove the ownership of digital items such as game skins, and they can also be used to prove the ownership of physical assets.

Other tokens, like coins or paper money, are homogeneous. Homogeneous tokens are the same, they have the same attributes and value when exchanged.

NFT What is it for?

NFT tokens can be used for digital assets that need to be distinguished from each other, such as encrypted collectibles such as CryptoKitties, to prove their value or scarcity. They can represent everything from virtual plots to artworks, to ownership licenses.

NFTs are not traded on standard cryptocurrency trading platforms, but on digital markets such as Opensea or Decentraland's LAND market.

Like Bitcoin and other Ethereum-based ERC-20 tokens are interchangeable. Ethereum's non-fungible token standard, platforms such as CryptoKitties and Decentraland use ERC-721. On other blockchains supported by smart contracts, NFT tools can also be used to create NFTs. Although Ethereum was the first to be widely used by NFT, NEO, EOS and TRON now all have NFT standards.

NFT and its smart contracts allow detailed attributes to be added, such as the identity of the owner, rich metadata, or secure file links. The effectiveness of NFTs can irrevocably prove digital ownership, which is an important advancement for an increasingly digital world. They can see that blockchain's promise of trustless security applies to almost any asset ownership or exchange.

Just like the challenges faced by the blockchain so far, NFT and its protocols and smart contract technologies are still under development. Creating decentralized applications and platforms for managing and creating NFTs is quite complicated. In addition, there is the challenge of creating standards. The development of blockchain is fragmented, and many developers are working on their own projects. To be successful, a unified agreement and interoperability may be required.

NFT's future

NFT is mainly used in games and encrypted collectibles. More and more well-known brands license their own content to cast NFTs. Fantasy football game Sorare has signed 100 football clubs on its platform, and "Doctor Who" like The Smurfs, Minecraft and BBC have all been cast into NFTs. .

For games, NFTs can be used to represent in-game items, such as skins, which may allow them to be transplanted into new games or traded with other players.

However, their potential is much greater and may be used in copyright and intellectual property, ticketing, and electronic game sales and transactions.

NFT adds potential to the creation of security tokens, namely the tokenization of digital assets and real-world assets. Physical assets such as property can be tokenized to achieve fragmented or shared ownership. If these security tokens are non-homogeneous, then the ownership of the asset is fully traceable and clear, even if only tokens representing partial ownership are sold.

Further applications of NFT can be certification, such as qualification certification, software licensing, guarantees, and even birth and death certificates. NFT's smart contract immutably proves the identity of the recipient or owner, and can be stored in a digital wallet for easy access and representation. In the future, our digital wallet can contain every certificate, license and asset proof that we have.