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NFTs: what are they and how do they work?

The 2020 year was marked by the explosion of the DeFi market, which grew mainly due to the overvaluation of tokens such as Chainlink (LINK), yearn.finance (YFI) and Uniswap (UNI). However, in 2021, another category of cryptography is also stealing the spotlight: the NFTs (non-fungible tokens).

Like cryptocurrencies, NFTs are assets based on blockchain and cryptography. However, these tokens are not interchangeable with each other, as with Bitcoin (BTC), for example. This is purposeful, as they represent something unique, such as works of art, items for electronic games or any differentiated and collectible digital asset.

In short, NFTs create verifiable shortages in the digital universe. An artist can create digital works and sell them through these tokens, in order to guarantee their authenticity.

CoinGecko estimates that the market capitalization of NFTs is $2.7 billion

There are platforms dedicated exclusively to the commercialization of NFTs, as is the case of Rarible. The company recently capitalized $1.75 million in an investment round, according to a statement.

The segment leader is the token Flow, from Dapper Labs. The token has a unit value of $19.96 and a total capitalization of $459 million. In other words, this asset alone represents 17% of the NFT market.

NFTs are useful for any developer who wants to create a unique digital item. Because of this, the entertainment industry is starting to invest heavily in these crypto assets.

In the last few days, the band Daft Punk has announced the end of their career. Since then, the group has distributed NFTs based on their work to some celebrities, according to the Digital Music News report.

Actress Lindsey Lohan sold the token presented by the musicians on Rarible, earning 8.8 ETH. The sale yielded approximately US $ 15 thousand for the artist.

In addition to the music industry, the games market is also eyeing NFTs. Atari, which is one of the most traditional companies in the industry, created the Atari Token. Both the company and other developers can use the technology to create unique items in electronic games.

Through the Atari Token, for example, Virtually Human Studio (VHS) is developing a game called ZED RUN. In it, users can care for, develop and even market digital racehorses. Currently, buying a horse costs at least US $40, according to VR Scout.

3 thoughts on “NFTs: what are they and how do they work?”

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