How Are NFT and Blockchain Related?
Understanding what's behind the ongoing gold rush to buy and sell NFT art is crucial these days. Learn how NFTs are allowing artists to register their digital art through blockchain and convert them into a secure digital asset.
Non-fungible tokens (NFTs) are blockchain-based tokens that represent a single asset such as a work of art, digital content, or media. An NFT is a digital certificate of ownership and authenticity for a digital or physical asset that is irreversible. Let’s start with a definition of blockchain and how it relates to NFT.
Blockchain was introduced as the technology behind Bitcoin, the first cryptocurrency. Think of it as the infrastructure for cryptocurrency – if cryptocurrencies were cars, blockchain would be the road. While there is some debate among experts about the future of cryptocurrencies, there is no debate about the bright future of blockchain technology. Blockchain is the next new breakthrough.
Everyone agrees that this technology is a huge advance-perhaps the biggest since the advent of the internet. As a result, most big companies like Google and Amazon are fighting for their piece of the pie, working on their own blockchain solutions. The time spent reading this guide will more than pay for itself.
Compare it to reading a book about the Internet in 1994, when TV shows were still discussing the birth of e-mail.
The future of decentralized technology is bright, and whether you are interested in cryptocurrencies or blockchain technology, knowing the basics of blockchain is a must. This includes a simple explanation of how blockchains work, the problems they solve, and their incredible benefits to the world today it is widely discussed not only in the world of finance. Blockchain is already being used in marketing and computer games to store and process personal data and identification. But, exactly, what is blockchain?
Let’s put it that way.
In its most literal sense, blockchain refers to a continuous chain of blocks. It has all transaction records, including tulip bulbs in a botanical garden. Unlike conventional databases, these records cannot be changed or deleted, only new ones can be added. Blockchain is also called distributed ledger technology because many independent users store the entire chain of transactions and the current list of owners on their computers. Even if one or more computers fail, the information is not lost.
NFTs and Cryptocurrency
Non-fungible tokens are not the same as currency. Fungible refers to items that can be swapped without causing harm. We are neither better nor worse off if we swap one-dollar bills. We’re no better or worse off if we swap equal amounts of bitcoins (save for transaction fees). We’re no better or worse off if we swap the same number of fungible tokens (such as gambling tokens, whether physically stored behind a casino counter or digitally stored on a blockchain).
Non-fungible tokens, on the other hand, are not interchangeable in this way. Essentially, they’re digital collectibles. They’re also nothing like physical collectibles as collectibles. There is no other physical object in the world that is exactly like it if I own a physical work of art.
In contrast to atomic or quantum-scale particles, distinct medium-sized physical objects (such as works of art) have the property of differing in their constitution and structure in some discernible way (perhaps only visible with the use of a microscope), even if the difference is minute.
This is critical. With the exception of science fiction counter examples (such as the fact that we’re all living in “The Matrix” and thus our entire existence is inherently digital), the real physical world can only be digitized in approximation, never exactly. Furthermore, our technology is capable of distinguishing between the two.
Proponents of NFTs argue that this isn’t the case. The problem is scarcity, not replication. Even if digital collectibles are replicable, blockchain technology allows them to be scarce. A digital file can, of course, always be duplicated exactly. A digital file on a blockchain, however, can be scarce, maintain its scarcity, and thus achieve value that is negotiable and thus a medium of exchange when cryptographically signed by some person or organization of standing (such as Jack Dorsey in tokenizing and then selling his genesis tweet).
But which blockchain are we talking about?
NFT and Etherum
The commercialization of Web 3.0 protocols has spawned a slew of new applications in the areas of decentralized finance (DeFi) and digital asset tokenization on public and private blockchains. Non-fungible tokens (NFTs) are becoming more popular as a means of proving digital asset ownership and authenticity. Many large companies, particularly those with significant intellectual property holdings, are using digital items, collectibles, content, and moments in the form of NFTs to create new customer experiences and product offerings.
The concept of fungibility refers to an asset’s ability to be exchanged for another asset of the same kind. The US dollar is a good example of a fungible asset because you can trade one dollar for another and know the value will be the same regardless of which dollar you have. Non-fungible assets, in contrast to fungible assets, are valued differently based on their unique characteristics and scarcity, such as collectibles such as baseball cards.
Developers who want to make an NFT must upload a smart contract with the required functionality to a public blockchain, such as the Ethereum network. There are several well-known NFT smart contract standards available today, including ERC-721.
NFT creators can use the Ethereum Geth node running on a Managed Blockchain instance to transact on the Rinkeby testnet on Ethereum. A JSON RPC request is sent to an Amazon API Gateway REST API endpoint to start the NFT creation process, which is then forwarded to AWS Lambda.
Lambda implements the logic for deploying, minting, and obtaining ownership of a token when configured as a proxy integration. It sends the signed transaction to the Ethereum blockchain by forwarding the request to a Managed Blockchain HTTP endpoint. Depending on network traffic and gas fees paid, the confirmation of a transaction sent to the Ethereum network could take several minutes. We recommend waiting for a predetermined minimum number of confirmations (a configurable parameter) to be completed on the blockchain so that the transaction cannot be reversed.
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