The Reason Behind The Invention of NFTs
Have you ever thought about the invention of non–fungible tokens (NFTs)?
Everything mankind has ever invented came into existence for one reason only; to serve the world either by solving a problem or simply making particular things easier. Now what do non–fungible tokens seek to solve?
Some of the earliest explorations into the kind of digital ownership that NFTs offer in the crypto industry began in 2012 with colored coins. Colored coins, unlike today’s NFTs that are tied to the Ethereum blockchain, were developed on the Bitcoin blockchain. However, much like non–fungible tokens, Colored Coins were designed to represent a variety of assets, both digital and physical. So why are these coins history? Why did they fail? It was not all their fault, to be fair.
Bitcoin and pre–NFT tokens
The Bitcoin blockchain is simple. It was solely developed to facilitate decentralized payments, that is, to allow users send and receive payments without an intermediary. It is merely a store of value and medium of exchange, and works as an alternative to traditional currencies. Due to the many limitations of the Bitcoin blockchain, Colored Coins were only able to function if all participants agreed to their worth, meaning the system would collapse if only one participant in the transaction decided to disagree that a coin was linked to a particular asset.
Ethereum
Ethereum on the other hand, takes it a step further by using the blockchain to create a decentralized computer. As a programmable blockchain, Ethereum is endless. The capabilities of the blockchain allow for much more open–ended approach and unlike Bitcoin, it finds application in countless areas, including DeFi, NFTs, and smart contracts.
The link between non–fungible tokens and the real world
The Ethereum blockchain made possible the creation of the first NFTs as we know them today. Non–fungible tokens that can be tied to particular assets, prove digital ownership, and provide a tamperproof record of transactions. The reason NFTs are so unique is that they are a bridge between the digital world of crypto and the real world of physical objects. They can be used to represent a variety of things: art, clothing, furniture, smart gadgets, and in some cases even pieces of real estate, and pretty much everything. That being said, this might not have been the only reason NFTs were invented. It might have not been the only problem they were looking to solve, but it is undoubtedly brilliant and it does represent a significant part of the future of the technology going forward.
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Have you ever thought about the invention of non–fungible tokens (NFTs)?
Everything mankind has ever invented came into existence for one reason only; to serve the world either by solving a problem or simply making particular things easier. Now what do non–fungible tokens seek to solve?
Some of the earliest explorations into the kind of digital ownership that NFTs offer in the crypto industry began in 2012 with colored coins. Colored coins, unlike today’s NFTs that are tied to the Ethereum blockchain, were developed on the Bitcoin blockchain. However, much like non–fungible tokens, Colored Coins were designed to represent a variety of assets, both digital and physical. So why are these coins history? Why did they fail? It was not all their fault, to be fair.
Bitcoin and pre–NFT tokens
The Bitcoin blockchain is simple. It was solely developed to facilitate decentralized payments, that is, to allow users send and receive payments without an intermediary. It is merely a store of value and medium of exchange, and works as an alternative to traditional currencies. Due to the many limitations of the Bitcoin blockchain, Colored Coins were only able to function if all participants agreed to their worth, meaning the system would collapse if only one participant in the transaction decided to disagree that a coin was linked to a particular asset.
Ethereum
Ethereum on the other hand, takes it a step further by using the blockchain to create a decentralized computer. As a programmable blockchain, Ethereum is endless. The capabilities of the blockchain allow for much more open–ended approach and unlike Bitcoin, it finds application in countless areas, including DeFi, NFTs, and smart contracts.
The link between non–fungible tokens and the real world
The Ethereum blockchain made possible the creation of the first NFTs as we know them today. Non–fungible tokens that can be tied to particular assets, prove digital ownership, and provide a tamperproof record of transactions. The reason NFTs are so unique is that they are a bridge between the digital world of crypto and the real world of physical objects. They can be used to represent a variety of things: art, clothing, furniture, smart gadgets, and in some cases even pieces of real estate, and pretty much everything. That being said, this might not have been the only reason NFTs were invented. It might have not been the only problem they were looking to solve, but it is undoubtedly brilliant and it does represent a significant part of the future of the technology going forward.
Follow Xapa on social media and stay tuned for more!
