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NFT (Non-Fungible Token)
2023.06.19
Greetings from the PARAMETA Team,
The world is experiencing a downturn in both online and offline economies. Accelerating inflation against the backdrop of various internal and external risks, such as food shortages due to prolonged wars, soaring oil prices, and the continuation of low interest rates in major countries such as the U.S., have shaken the offline economy, and virtual assets have also been experiencing an overall downward trend due to various issues, causing a shock to the online economy.
Looking back on previous experiences of market contraction, we believe that the winter-like temporary downturn may actually be an opportunity to create a variety of opportunities, and there is no denying that there will be a major Web3-based trend that will drive it. In particular, the potential of NFTs (Non-Fungible Tokens), which are expected to rise in value as a major asset in the Web3 era, continues to be highly regarded. This is evidenced by the fact that large companies in Korea and abroad are lining up to adopt NFTs.
So let’s take a look at what NFTs are and how they’re evolving.
NFTs are blockchain-based tokens that cannot be exchanged or duplicated, making them unique and scarce. NFT stands for ‘Non-Fungible Token’ or ‘non-fungible token’. To clearly understand the meaning of ‘non-fungible’, it is best to compare it to the opposite concept, FT (Fungible Token).
FTs are tokens that are interchangeable, meaning that each token has the same value and function. For example, a $100 piece of physical currency that you own is worth the same as a $100 piece owned by someone else, so they can be used interchangeably. Similarly, assets that are interchangeable, such as Bitcoin (BTC), Ethereum (ETH), and ICON (ICX), can all be considered fungible tokens. (Of course, there is a distinction between a coin that is used on its own blockchain network (mainnet) and a token that is built on an already existing blockchain.)
NFTs, on the other hand, are not interchangeable because each token has its own unique information or characteristics and therefore has a different value. Utilizing blockchain technology is the same as FTs, but unlike the aforementioned existing virtual assets, digital assets have a separate and unique perceived value that makes them non-interchangeable. In other words, it can be said that the criterion to distinguish between ‘possible’ and ‘impossible’ substitution is whether each token has unique information or characteristics.
NFTs can also be described as a proof-of-origin technology that acts as a “digital certificate of authenticity” for a particular asset, giving it a value of scarcity and uniqueness that is spreading across a wide range of sectors, including digital art, game item trading, and online sports.
So how does the blockchain technology behind NFTs work?
NFT system model
* Source : Non-Fungible Token (NFT) – Overview, Evaluation, Opportunities and Challenges, 2021. 05
NFT systems operate on blockchain, a distributed ledger technology that enables data to be transmitted and stored in a P2P (peer-to-peer) network. Blockchain allows participants to transparently view and verify transaction history. It also defines and issues tokens’ functions through smart contracts, which are program code that automatically execute when certain conditions are met.
Participants in an NFT system consist of creators and buyers, who can issue (mint) analog or digital goods as NFTs through the NFT system. Each time an NFT is issued or sold, a smart contract is executed and a new transaction is sent, and after the transaction is confirmed on the blockchain, the NFT’s metadata and owner information are added to a new block.
When a buyer purchases an NFT, metadata information such as the artwork’s owner, purchase price, ownership change, and acquisition price are stored on the blockchain. The buyer can take ownership of the NFT artwork, but will not receive the creator’s actual creation (drawing, photo, etc.) or original files. The creator will be compensated whenever the NFT is sold and changes hands.
Major NFT Protocols
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* Source : Non-Fungible Token (NFT) – Overview, Evaluation, Opportunities and Challenges, 2021. 05
Let’s take a look at some of the most common NFT ecosystem terms.
Minting
This is the term for ‘minting’ NFTs and refers to the creation of NFTs of digital assets such as pictures, videos, etc. The initial lottery or first-come, first-served purchase of new NFTs is also referred to as minting. |
Whitelist
This is a list of people who are prioritized for purchasing NFTs, meaning that they are given the right to purchase NFTs before the general public and with greater ease. Typically, interested people are selected early on in the project and given the right to mint NFTs, encouraging self-promotion and project activation. |
Drop
This refers to the uploading of NFTs for sale through an NFT marketplace, i.e., the release of NFTs to the public. |
PFP (Profile Picture)
This is a type of NFT that can be used as a profile picture on social platforms, including NFT communities. Recently, it has become a culture to express one’s identity with a PFP. |
OpenSea
This is the world’s largest NFT exchange that allows you to issue and trade NFTs based on the Ethereum platform. |
PARAMETA is also creating a new Web3 era by adding NFTs and other applied technologies to the core technology of its blockchain platform. We introduce the HAVAH project as the first example of applying Parameta’s NFT technology.
HAVAH, an interchain NFT comprehensive entertainment platform that connects NFTs issued by each chain in various areas such as gaming, social, and finance, is the first mainnet to be built with PARAMETA’s own blockchain framework, the Parameta Framework, which PARAMETA provides for Web3 businesses. The project, which applies all of PARAMETA’s blockchain technologies from blockchain platforms to interchanges, blockchain wallets, governance and token economies, NFTs, and DEXs, is a collaboration between Parameta, the ICON Foundation, and domestic game company ‘2bytes’.
‘HAVAH Project’ Official Website
