Non-Fungible Tokens (NFTs) have become popular in the last time. When you have two 1 dollar coins in your pocket, it doesn't matter whether you pay for your coffee with one coin or the other. The coins only represent a value and are interchangeable against each other or fungible. Non-fungible tokens, however, are representing one specific asset and are thus unique. Mostly, these tokens represent digital art, with the binary data of the particular file stored as the value of the NFT record. For larger objects, even if they are not of a digital nature, all identifying information can be stored as an NFT to prove owner- and authorship. For digital files, a hash of the file can be taken as the value, with MD5 being the most common hash algorithm used to verify digital files. Other algorithms such as SHA-1 are popular as well. With the first confirmation on the blockchain, your NFT gets an immutable timestamp, so you can prove that you were the first one who published the file in question.
It has to be taken in consideration that the records on the Namecoin blockchain will expire after 36,000 blocks. Even though the timestamp itself will be preserved even on an expired NFT record, you will have to take care of a regular renewal in time to avoid any abuse of your NFT.
Definition of NFTs
On December 2, 2013, Vitalik Buterin published the
Ethereum whitepaper, introducing the term “non-fungible assets“, referring explicitely to domain names on the Namecoin blockchain. On January 24, 2018, Ethereum introduced the
Non-Fungible Token Standard (EIP-721). Since then, the term NFT has been used as a synonym for all types of assets secured on blockchains.
Technically, an NFT is a unique cryptographic asset (also called primary asset) that represents the secondary asset, which can be image data written directly to the blockchain or an external image linked by a URL. On Namecoin, the cryptographic asset is the key/value pair of the asset's name and its data value (the payload data of the secondary asset). On the back-end, this asset is assigned to a cryptographic token, represented by the assigned NMC address and its private key. Due to the concept of Namecoin’s expiration, this cryptographic token will change after each name update, including renewals, transfers or re-registrations. With so called
custom raw transactions, it is possible to renew the asset on the existing address.
However, the cryptographic asset is unique and exists forever since its creation, all historical data values are immutably attached. For more details, see chapter
Data structure and integrity as well as section
Sortable tables of the connected auction platform.