What Is NFT? Non-Fungible Tokens Explained

what is nft

If you’ve been on the Internet recently, you’ve undoubtedly heard of the term NFT. Everyone seems to be talking about them, and yet not that many people are fully aware of what they really are.

The only thing that seems to be obvious is that NFTs are currently hot and, more importantly, worth a lot of money. Needless to say, all industries are trying to make hay while the sun shines with NFTs and the gaming industry is no different. So, bro, let’s take a look at whether you should be excited about NFTs and if they truly are the future.

What Does NFT Stand For?

NFT is an abbreviation for Non-Fungible Token. This basically means that it’s something truly unique. Note that we said “unique” and not “one of a kind” but more on that later. In the most basic explanation, an NFT is like a cryptocurrency, but there is a bit of a crowbar separation between the two. While NFTs are also based on blockchain technology, they differ from cryptocurrencies in many ways.

For example, Bitcoins are fungible because you can trade one of your coins for another and neither of them will be any more or less unique. An NFT, however, isn’t mutually interchangeable. No two are the same. It’s like placing a sticker onto your rare coins, Pokemon cards, a pair of Jordans (limited edition, of course), whatever. Think of it as a digital asset that creates scarcity with a certificate to prove its authenticity.

nft meaning

When buying an NFT, a person is essentially buying a proof of ownership that is stored on the Ethereum Network. In theory, any piece of digital asset can become an NFT. Things like digital art, a video game item, a video clip, sound clip (such as a song) are all fair candidates for becoming NFTs. This also leads to a lot of confusion about how valuable NFTs actually are but we’ll get to that later.

The NFT Market

As already mentioned, the NFT Marketplace is mostly based on the Ethereum Blockchain network. Artists can sell digital artwork as NFTs to the blockchain and get a commission when someone buys or trades their NFTs. In order to buy an NFT, a person needs to have a wallet that supports NFTs and some Ethereum. Using Ethereum, people can buy NFTs and transfer them to their wallets. Afterward, the value of NFTs can increase and decrease so NFT owners can put their tokens back on the market, and potentially make an even bigger profit.

NFT Ownership Explained

nft marketplace

Explaining NFT ownership isn’t as straightforward as you might think. If you own a bunch of cryptocurrencies, they will be associated with your crypto wallet. As long as you keep your wallet safe, they will belong to you. Now, with NFTs, things get a bit complicated. For example: if you buy a digital file, you aren’t really preventing other people from downloading it. You are simply making an agreement with the blockchain that you are the owner of that particular art. It’s almost like buying a public park bench. You may own it, but anyone can sit on it.

This is one of the main reasons why lots of people question the value of NFTs. Of course, with Blockchain games, things aren’t as chaotic. A person can, for example, own an in-game costume that’s truly unique and trade it around with other players. Owning an NFT is more of an agreement than an actual acquisition.

The Many Forms of NFTs in the Digital World

While it started out as an idea to help digital artists protect their work, the idea has gone a bit off-rails recently. Because of its digital nature, it’s possible for anyone to turn anything into an NFT as long as it’s digital. People have literally turned tweets into NFTs and sold them for thousands of dollars. While we aren’t going to talk about the morality of selling tweets, we are going to cover how some popular NFTs work.

NFT Digital Art

It used to be that, when an artist draws a picture and posts it online, it no longer belongs to them. Literally, nothing is stopping anyone from right-clicking on that piece of art (pictures, portraits, trading cards, etc.) and downloading it. Heck, once downloaded, nothing is stopping people from printing it, framing it, and putting them up on their walls. So, how do NFT sales help?

Nowadays, when an artist creates a digital picture, they can turn it into one or more NFTs. Normally, only a handful of NFTs are created per digital art piece. Once all the NFTs have been sold, the Artist will receive a commission on each one sold and maybe even a small commission when those NFTs get traded amongst users.

The question here is: What is stopping people from downloading a picture that’s someone’s NFT? The answer is simple: Absolutely nothing. You don’t have to own an NFT picture in order to download it and given how much some of them cost, it seems absurd. NFT owners can “legally” use their NFTs as profile pictures and trade them for a profit with other users.

In the end, owning an NFT picture is all about being able to say that you LITERALLY own something and having proof that your ownership is recorded on the blockchain. Not to mention, buying NFTs is also a great way to support the original artist.

NFT Games

nft-games

NFT Gaming has given rise to a new form of trend in the game industry. While video games normally follow the Buy-to-play and Free-to-play model, NFT technology has given rise to the Play-to-earn model. Just like the name suggests, players are able to play games and earn real money from them. Now before you get too excited about making money by just playing games, please note that, just like always, there is a catch… or six.

On paper, Blockchain gaming makes sense: you play a game and you collect or buy an item( with real money) and that in-game item is an NFT. As the owner of the NFT, you get to keep it, trade it or even sell it for a profit. Since NFT items are limited it created a scarcity of that particular in-game item which in turn increases its value. Sounds great right? Play a game for a good while, get a rare item and sell it for a profit, right? Sure, but as we said, there are catches.

For one thing, these particular NFTs are only valuable in the game they came from. Outside the game an item is worthless. Secondly, while most NFTs are sold for Ethereum, NFT gaming items almost always have their own unique tokens which game developers control directly. So, before you even start playing play-to-earn games, you need to buy some of their own currency and don’t forget about all the gas fees that come with conversions too.

Finally, even though we live in an age of realistic graphics, NFT games tend to look pretty outdated and usually aren’t very fun to play. Because of all these roadblocks, many people are calling NFT games a scam.

NFTs in Casino Games

This brings us to NFTs in Casino Games. While the idea of including NFTs in casino games is still relatively new, a few names in the online casino industry have started to experiment with the idea. Just like with cryptocurrencies, online casinos are definitely “on board” with the idea, but development is still in its very early stages. Unlike cryptocurrencies like Bitcoin, Ethereum, Litecoin and others, NFTs are unique so determining their value and wagering them isn’t as easy as it sounds. Fortunately, many game developers have done their homework on NFT projects and have come up with a few ideas to incorporate into online casino games.

How Do NFTs Work With Online Casinos?

nft casino

Firstly, some casinos will have their entire site based on blockchain technology where players can earn casino-specific NFTs by just playing games at the casino. This is more along the lines of crypto mining than earning/buying NFTs. The currency/NFT will usually be of little value and will (probably) only be useful within the online casino.

Another way online casinos have been experimenting with NFTs is by buying entire NFT collections and offering them to players as prizes. Evolution gaming recently spent a good amount of money to acquire CryptoPunks NFT digital assets and offered them as prizes on their games (instead of money). The prices for these digital files went in the tens of thousands.

Finally, as of writing this, a brand new NFT collection is in development. Sloties are NFTs made specifically for online casinos. Users can own one of 10,000 unique sloties and earn a passive income from casinos that incorporate them. This new take on slot games will have users gamble their NFTs rather than fiat currency. Slotie game developer is also working on a way for users to “breed” their Sloties and create junior sloties, similar to how Axie Infinity works. Naturally, Sloties will use their own digital currencies and will probably require a unique digital wallet as well.

Are NFTs a Scam?

If any of this sounds fishy to you, that’s because it is. While there’s no denying that NFTs are currently valuable and highly sought, the reality of the situation is that it all seems like some kind of a big scam. On the other hand, there are clear transaction histories (available to everyone) on the blockchain which states that NFTs have been sold and traded for thousands of dollars. For these reasons, we have compiled a list of advantages and disadvantages of NFTs.

NFT advantages

  • They are valuable. There’s no denying that NFTs are valuable. As of writing this, everyone and their mother wants to get in on NFTs to either keep them or flip them for a profit. I think it’s safe to say that nobody can truly determine whether NFTs will be profitable in the future so right now might be the only opportunity to make a profit on them.
  • Bragging rights. Even though most NFTs are, technically, available to everyone to use, there is a special kind of feeling knowing that you are the actual owner of one. Just like owning a vintage car locked up in your garage for nobody to see, there’s a special happy place for proud owners of a non-fungible token.
  • Passive income. Some NFTs, such as in-game items can earn their owners a passive income similar to interests. Crypto Enthusiasts and NFT holders can potentially acquire lots of NFTs and simply sit on them while they rake in a profit each month.

NFT disadvantages

  • Questionable real-world value. People have almost gotten used to the idea that cryptocurrencies will always have some form of value, however, it’s extremely difficult to justify the value of a good tweet or a lousy picture that just happens to be an NFT. When all is said and done, people are buying downloadable pictures that only have their digital signature. We wouldn’t be surprised if one day everyone suddenly snapped and realized that they have been spending their money on something that’s worthless. At the same time, we might be completely wrong.
  • NFTs can be centralized. This is especially true with pay-to-earn games where NFTs are only worth something to the people who are playing the game. While you can buy lots and lots of things by using cryptocurrency, NFTs are really limited in their use. Once a game stops being relevant, the NFT will become practically worthless.
  • Some NFTs look like crap. While there’s nothing wrong with making a brilliant piece of digital art and selling it to people as an NFT, some people are taking things to a whole new level. Some of the most valuable NFTs out there look like amateurish drawings and that’s a generous overstatement. It seems that the only reason why anyone is talking about some of these works is because of their digital format. People are literally able to take screenshots, slap an NFT label on them, and sell them for a profit. It’s things like these that make us question how smart it is to own NFTs.

Are NFTs the Future of Online Gambling?

nft gambling

In short: it’s way too early to say. Even though we’ve seen a slew of crypto casinos it’s too early to say that Bitcoin and Ethereum casinos are here to say. With NFTs, we are even less sure.
Right now, it’s pretty clear that there is some value to be found in NFTs (no matter what they are) but only time will tell if NFTs will be growing in price and popularity, or will they fade into obscurity.

If you are interested in getting in on the action, our advice is to do it now. NFTs have never been more relevant than they are now and that may not be the case in the near future. So, if you are planning to buy NFTs, don’t forget to sell NFTs as well so you don’t end up with a bunch of worthless digital signatures. Only time will tell how much the gambling industry will benefit from incorporating NFTs and, more importantly, if they will want to keep investing in NFTs for future online casino games.

Conclusion

Depending on how you look at things, the popularity of NFTs can be viewed as a golden opportunity to make a profit or it will become a “this one time, when we were drunk” story. If you think you can make a profit by buying and selling these digital pieces of art, don’t let us stop you. If you’d like to take a wait-and-see approach, we can’t say we blame you either. Whatever you may decide, remember to play responsibly.

Despite being rough trade, Derrick prefers to use sarcasm over fists because the parts of Atlanta he grew up in still consider it witchcraft. A.k.a. The Buff Dude, he’s a sucker for roulette, a total video game geek, and a beast when it comes to online casino security. We mainly hired him because he is scary AF but don’t tell him we said that.

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