How do NFTs Work on Ethereum?
Non-Fungible Tokens (NFTs) are unique digital assets verified using blockchain technology, primarily on the Ethereum network. Unlike cryptocurrencies such as Bitcoin or Ether, NFTs represent ownership of a specific item or piece of content, such as art, music, or virtual land.
1. Smart Contracts
NFTs are built using smart contracts, primarily through the ERC-721 or ERC-1155 standards. These contracts define the rules of the NFT, such as ownership details, transferability, and metadata storage.
2. Minting Process
To create an NFT, an artist or creator “mints” it by uploading their digital file to an NFT marketplace. This process generates a unique token on the Ethereum blockchain, associating the asset with a digital certificate of authenticity.
3. Ownership and Transactions
Once minted, NFTs can be bought, sold, or traded on various platforms. Ownership is tracked on the blockchain, ensuring transparency and security. When a transaction occurs, the smart contract updates the ownership information stored on the blockchain.
4. Future of NFTs
The NFT market is evolving, with applications expanding beyond art to include gaming, virtual real estate, and more. As Ethereum continues to develop, the potential for NFTs and their integration into everyday transactions is promising.