NFTs
Last updated
Last updated
NFTs are digital assets similar to ERC-20 tokens, in fact they could be referred to as ERC-721/ERC-1155 tokens as they are supported by ERCs 721 and 1155 which set the standards for non-fungible assets on Ethereum. NFTs can be transferred and traded much like ERC-20 tokens but that is where the similarities end.
The main difference is in the name: NFTs are non-fungible tokens. This means each token is unique and cannot be replaced by another token. For example, a dollar bill is a fungible asset: any other dollar bill could replace it, while a work of art by Picasso is non-fungible, it is wholly unique.
NFTs are created using smart contracts and are stored on the blockchain, which means that anyone can see them, but only the owner can access them with the private keys that unlock the account the NFT exists in.
Collectibles - NFTs can represent physical collectibles like art, toys, and clothing. In this case, an artist could create an NFT with their artwork on it and sell it on the blockchain for cryptocurrency.
Digital goods - Similar to collectibles, NFTs can be used to represent digital goods like games, art, and music. Many artists and creators release NFTs created from their art to fund their creations and receive support from their communities and supporters. Many artist use NFTs in this way, as a fundraising tool or simply a way to sell their art.
Identity - Another use case is for identity management. For example, a person might have an avatar representing them on social media sites like Facebook or Reddit (which already exist). With NFTs, however, these avatars could be traded on an exchange for money or other cryptocurrencies. Many so-called pfp (profile-picture) NFT projects have been created and remain one of the most popular uses of NFTs Many use NFTs as a speculative asset and trade them similar to how art is traded in fine art markets. Many noteworthy NFTs such as CryptoPunks, BAYC etc. routinely trade for hundreds or thousands of ETH. While the highest priced NFTs being traded does generate headlines, non-financial uses of NFTs also exist.
A notable non-financial use of NFTs is POAP (Proof of Attendance Protocol) which is an NFT project that mints NFTs to mark memories as digital collectibles, I like to imagine them as digital merit badges for attending events of completing some requirement to earn them. They are free to mint but do exist on secondary markets.
NFTs are stored on the blockchain, and your private keys give you access to them. So the best way to keep NFTs safe is by keeping your private keys safe and the best way to keep private keys safe is by using a hardware wallet. Hardware wallets are physical devices that store your private keys offline. They do not expose your private keys to the internet like a hot wallet such as MetaMask does, so they cannot be hacked or compromised by malware or viruses. You can use them to securely store any cryptocurrency, including NFTs.
There are several options when it comes to hardware wallets, but we recommend a hardware wallet with a large touchscreen that allows you to see and verify every transaction so you can easily see transaction request data and be certain about what you are signing. Our Lattice1 wallet Is easy to use and compatible with all operating systems and offers the ease of use of a hot wallet but with the security guarantees that only a Lattice1 hardware wallet can offer!
