What Are NFTs and How Do They Work

What Are NFTs Non-Fungible Tokens (NFTs) have taken the world by a storm. With over $25B in sales in 2022 alone, the phenomenon of NFTs is certainly intriguing.  In the simplest of terms, NFTs are crypto assets that simultaneously represents the asset, the creator of the asset and the current and historical ownership information of the asset. In short, the asset and its provenance.

NFT assets can be both digital or physical. Digital assets are fairly straightforward, but creating NFTs of physical assets usually makes it a bit more complicated as physical assets require physical possession. More on that later. 

Digital assets are easier to create and digital artists have contributed immensely to the rise of the NFT art genre. The early adopters have also reaped massive rewards. Consider Beeple’s Everydays – The First 5000 Days NFT artwork that sold for $69M. Or The phenomenon of Bored Ape Yacht Club (BAYC) that has made millionaires out of the hundreds of collectors.  Or the 10,000 unique collectible ‘punk’ characters “CryptoPunks” that inspired the NFT movement in the first place.  The punks are always in high demand and have gained an almost cult like following amongst the crypto community. 

NFTs are unique in the way they represent provenance of the assets. Anyone can create any sort of digital (or physical) object and represent it as an NFT. For example, images, videos, files, 3D objects, AR/VR objects, in-game resources, pixels on a screen, etc. all can be tokenized. At its simplest, the tokenized asset is then represented by a tokenID on the blockchain it is registered on. In addition, the standards also allow creators to add any attributes that they want to associate with the asset. This forms the metadata of the asset and can be stored either on a centralized server such as an AWS server, or with decentralized protocols such as IPFS or Arweave, making the information permanent. Ideally, this metadata should not be modifiable, so as to preserve the integrity of the underlying asset. 

What are NFTs Useful for? 

NFTs are increasingly finding a large set of use cases to the extent that it is likely that the question be reframed as what are NFTs not useful for? To start, NFTs are a great way to include provenance – not only for art, but for any digital document, and create a digital trail of record. These are beneficial for record keeping as much as in a gaming environment. Then, there are luxury brands, sports, and other memorabilia, that can be digital first. As the Metaverse expands, digital twins of physical assets will be represented as NFTs. Token gated content, DeFi NFTs, and identity in the social community are all fair game. 

Brewing Your Own NFTs

The process of creating NFTs may seem simple at first, but there are a lot of nuances that should be understood by the primary creators. The blockchain space is a one-directional street and once an asset has been created as an NFT, it is usually very hard to modify it. So, creators need to understand the lifecycle of the asset itself and program it accordingly. The NFT Brewery makes is easy for creators to think through the journey – providing creators with a simple template for creating their NFT assets. 

The NFT Brewery provides the expertise for companies to boldly embrace Web3 technology and adapt to the demands of a decentralized and globally distributed audience. The NFT Brewery model supports major blockchains such as Ethereum, Polygon, Avalanche, ImmutableX, Solana etc. We take care of the complexity of the blockchain networks, so that creators businesses and enterprises can focus on crafting unique experiences around these assets.  Our APIs and SDKs abstract away the complexity of working with blockchain technology, and provide regular developers with the tools to incorporate Web3 and NFTs technology within their existing workflows.

The Brewery Value

Interoperability: Our tools automate, manage and integrate all the content and metadata that is attached to the NFT and defines its usage. The NFT Brewery supports all types of assets, such as audio, video, images, 3D, AR/VR content, etc. as well as dynamic NFTs where the content may change based on external factors such as price movements, seasonality or other relevant events, etc.

Royalties: Primary creators can choose how to participate in secondary sales of their assets via embedding a royalty share on all trades that the asset may go through in the secondary markets.

Marketplace: Finally, we provide our customers with a fully integrated white label marketplace for both primary and secondary sales, integrated into their platform, in order to retain users to create a community focused on the NFTs.