What Is NFT? Exploring the Key Factors That Made NFTs a Global Sensation

What Is NFT? Why Has NFT Become a Global Trend?

NFT has become one of the most talked-about concepts in the technology world in recent years. Considered a product of the digital era, NFTs are predicted to continue making waves in the near future. So what exactly is NFT? If you are curious about this topic, let’s explore it together with ImTech in the article below to understand the real appeal behind NFTs.

1. What Is NFT?

NFT stands for Non-Fungible Token, which refers to a type of digital asset that cannot be replaced or exchanged on a one-to-one basis like cryptocurrencies. In essence, an NFT is a digital asset stored on a blockchain. It can represent artwork, music, videos, in-game items, or even virtual real estate.

What makes NFTs special is that each NFT has a unique identifier, making it a one-of-a-kind asset owned by a specific individual. Today, NFTs are commonly traded using cryptocurrencies and, in some cases, their value is also expressed in USD.

2. What Are the Common Applications of NFTs?

After understanding what NFT is, many people wonder how NFTs are applied in real life. With the rapid growth of information technology, NFTs are increasingly used as a leading tool to tokenize digital assets such as music, images, and artistic creations.

For example:
When a musician sells a song as an NFT, the buyer becomes the official owner after completing the payment. The song can still be listened to or performed by others, but only the NFT holder owns the original digital asset and its associated rights.

In addition, NFTs can represent various digital assets such as images, videos, games, and even tweets on Twitter. This allows creative works to be traded and owned in a transparent and secure way directly on the blockchain.

3. Key Benefits of NFTs

Tokenizing digital assets through NFTs brings significant benefits to both creators and buyers.

• Uniqueness:
  Each NFT has a unique identifier and cannot be replaced by any other asset. This ensures the exclusivity and value of every NFT.

• Transparency:
  NFTs are stored on the blockchain, a decentralized and transparent system. This guarantees clear ownership records and secure transactions, especially for valuing digital artworks.

• Transferability:
  NFTs can be easily bought, sold, or traded on NFT marketplaces. This creates liquidity and allows owners to generate profits from trading digital assets.

4. Notable NFT Tokens in the Market

Today, there are many NFT-related tokens designed to support different use cases. Among them, THETA, AXS (Axie Infinity), and Chiliz (CHZ) stand out as popular and highly rated projects in the blockchain ecosystem.

4.1 THETA

Theta Network currently has a market capitalization estimated at over 10 billion USD, with a maximum supply of 1 billion THETA tokens. THETA is primarily used to reward users who watch and share video content within the Theta ecosystem.

4.2 AXS – Axie Infinity

AXS (Axie Infinity) is a well-known NFT token developed by a Vietnamese team. Its market capitalization has reached approximately 2.5 billion USD, with a maximum supply of around 61 million tokens. AXS serves as the primary cryptocurrency for Axie Infinity, a popular blockchain-based game.

4.3 Chiliz (CHZ)

Chiliz (CHZ) is a blockchain platform with a market capitalization of around 2.3 billion USD and a maximum supply of 8,888,888,888 CHZ tokens. Closely associated with Socios.com, Chiliz plays a major role in the sports industry, enabling fans to purchase cryptocurrencies and participate in voting for their favorite teams and clubs.

5. Potential Risks of Overusing NFTs

Although NFTs gained massive popularity in 2021, NFT transactions have existed since 2017. According to DappRadar, NFT sales reached 10.7 billion USD in the third quarter of 2021 alone.

Many experts believe that the explosive growth of NFTs was driven by the COVID-19 pandemic. During lockdowns, people spent more time online, and the rising popularity of cryptocurrencies further accelerated interest in NFTs.

However, the strength of NFTs is also their weakness. Since anyone can create an NFT from almost anything, many low-value or meaningless tokens have flooded the market. This oversupply increases investment risks.

Therefore, if you are considering investing in NFTs, it is essential to equip yourself with sufficient knowledge before entering this market.

6. Common NFT-Related Terms

6.1 What Is an NFT Game?

An NFT game is a blockchain-based video game with its own in-game economy and token system. Players can earn valuable items and rewards in the form of NFTs, which can be owned, traded, or sold.

6.2 Metaverse NFTs

Metaverse NFTs are NFTs primarily used within the Metaverse (virtual worlds). These NFTs represent digital assets such as clothing, decorations, locations, in-game items, and more. Just like traditional NFTs, Metaverse NFTs can be freely traded on NFT marketplaces.

6.3 What Is NFT Art?

NFT Art refers to digital artworks created when artists tokenize their creations and store them on the blockchain. The value of NFT Art mainly comes from two factors:

• Digital verification of originality

• Proof of ownership on the blockchain

By applying blockchain technology, artworks become unique digital assets, enhancing transparency and security while allowing artists to monetize their work more fairly.

7. Conclusion

In the rapidly evolving digital era, NFTs offer numerous benefits and are expected to remain a major trend in the future. However, alongside these advantages come potential risks if NFTs are overused or misunderstood. Understanding NFTs and using them wisely will help users maximize their value while minimizing risks.