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Question: What are NFTs?
To respond: NFT stands for Non-Fungible Token. Non-fungible means it is unique and cannot be reproduced. A bitcoin is fungible in the sense that they are all the same. A one-of-a-kind football trading card would be non-fungible and derives its value from its rarity.
Thus, a non-fungible token is a non-interchangeable unit of data stored on a block chain, which can be sold and traded. Examples of data types that can be put on the blockchain as NFTs include many types of digital files, including photos, videos, and music.
The very first NFT was created by Kevin McCoy and Anil Dash in 2014. It was a music video directed by McCoy’s wife, Jennifer. McCoy recorded the video on the Namecoin blockchain. At the time, they referred to the technology as “monetized graphics”. NFTs started to get more interest when the ERC-721 standard appeared in 2017, it was later the same year that the famous website Cryptokitties appeared which sold tradable cat NTFs.
The vast majority of NFTs use the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or litecoin, but its blockchain also supports these NFTs, which store additional information.
NFTs claim to provide an audience certificate of authenticity (that is to say Proof of ownership), but this is only the beginning and the legal rights surrounding NFTs are still uncertain in many countries.
The concept of creating an NFT and minting it on the Etherum blockchain is a process that many creators of art and music have already touched on – but you have to be very careful when investing in NFTs – OpenSea (the largest NFT marketplace in the world) recently announced that 80% of all NFTs for sale on its platform are scams – you have been warned!
Current UK Chancellor of the Exchequer Rishi Sunak is getting in on the act and recently announced that he will be launching a non-fungible token (NFT) through the Royal Mint as part of a campaign to to make the UK a “crypto-asset hub world”!
In the future, NFTs could also represent individuals’ identities and even property rights.
Question: Was bitcoin the first cryptocurrency?
To respond: Bitcoin (BTC), launched in 2009, is certainly the largest (by market capitalization) and well-known cryptocurrency in the world today. However, there have been a number of other failed attempts to create digital money.
In 1989, a well-known American cryptographer called David Chaum created eCash and started his company DigiCash. Unfortunately, the company went bankrupt in 1998, but much of its technology was to be used in later attempts to create a digital currency.
Just when DigiCash was going bankrupt, an accomplished computer engineer called Wei Dai created B-Money in 1998 – it was in his own words “an anonymous, distributed electronic payment system”. He was unable to raise enough capital to launch it and it never launched – however, Sataoshi Nakamoto referenced elements of the B-Money system in his white papers some 10 years later.
In 1996, Douglas Jackson and Barry Downey created E-gold – it was a digital currency system backed by gold reserves in vaults in London and Dubai. While they made efforts to counter the criminal use of E-gold, they were eventually found guilty of running an unlicensed money transfer business, and the business was shut down.
In 1997, Adam Back (the current CEO of Blockstream) invented Hashcash which is still used in the bitcoin mining process today. This proof-of-work system was originally designed to try to limit email spam and denial of service attacks. Once again, Satoshi Nakamoto directly references Adam Back’s Hashcat algorithm in the now famous bitcoin white paper from 2008.
Again in 1998 another clever computer scientist by the name of Nick Szabo developed “Bit Gold” – again it was never implemented despite being the closest to the current bitcoin architecture.
Although Satoshi Nakamoto is rightly credited with the creation of bitcoin, it is clear that he stood on the shoulders of giants.
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By Stephen Whitelaw (https://bringbackmycrypto.com)