- Jack Lau
NFT Demystified Part 2
If you go to the internet and type "NFT", you will get an explanation something like this: "NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated." (This one is from https://www.investopedia.com/non-fungible-tokens-nft-5115211)
So many fancy words...... But really, if one were to ask, the keywords in the above definitions would be "cryptographic tokens", or simply "crypto tokens", and "blockchain".
It is probably easier to understand what is a blockchain than you think. Blockchains are just some blocks that are chained together. Ha ha --- lame joke.
What is so special about a "blockchain" that cannot be replicated?
First, why is this useful. Imagine this, during the pandemic, you need to travel around the world, say going past 10 countries. Each country wants to see your medical (vaccination) record of ALL the previous countries you have traveled to. So, country 1 wants to see your record from country 2. And, country 3 wants to see the records from country 1 and country 2.
Furthermore, each, of course, needs to have 100% confidence in the authenticity of the record.
So, how would you do that? Well, as you travel, you will carry the record of each country, and put them in a nice big folder for examination.
The problem is how would the inspector know that each of the records is genuine? The inspector can either trust you, or in the modern-day, somehow connect to the medical department of the previous countries you have been, and ask them to verify the record.
Sounds tedious, does it?
How about this? We devise a scheme, mathematically, that we know will be able to tell each record is genuine, based on the previous records?
For those who are interested, there is an excellent short video by MIT which explains blockchain graphically better than I can.
But, for those who just want to get a sense, imagine this. Before you leave a country, you are required to stuff your paper in a special bag, then someone is going to weigh the bag. Finally, regardless of how heavy your paper is, someone is going to put in some super-precision weight so that the total weight (your paper + the precision weight) will always be an even number. (Sorry, my mathematically oriented friend, I am grossly simplifying the situation.). And, if a stack of paper should be roughly about 0.3 kg, say, you will add 0.1 kg of precision weight to the bag, so the total weight is now 0.4 kg.
The beauty of it is that anybody who can measure how heavy your bag is will immediately know that an odd number will indicate a tampered bag. (Even does not necessarily mean it is definitely good though.)
Now, after the first country's record, which now weighs 0.4 kg, we make a further rule. While Country 2 is also issuing the medical record and is ready to add some precision weight to the "bag", say, we want t weight in country 2 to always be 3 times that of Country 1. In other words, we want the total weight of the Country 2 record to be 0.4 kg X 3, which is 1.2 kg. And, from now on, every subsequent country should be 3 times the weight of the previous bag. For country 3, the weight will be 1.2 kg X 3, which will be 3.6 kg.
So notice that if somehow the traveler (you) deliberately take out some paper from any of the bags, the whole weight system (weight of every bag) will not match the design (even number and 3 X of the previous country's record).
I can probably make this even more fun by assigning different multiplication factors (different numbers and some weird decimal places) and other rules to make this more robust.
But, hopefully, you get the gist of the analogy. Then, from then on, all we need to know is the rule, there should be some level of confidence in the authenticity of the paper.
Of course, in a real blockchain the math is accurate to hundreds of bits, and they don't use weight, but the digitization of the content in numbers. They also don't use simple addition as the operation.
Please do visit the demo on MIT's website for a more accurate demonstration. http://blockchain.mit.edu/how-blockchain-works
Why should cyrpto token be involved and what are they?
In the NFT (art) world, Ethereum is often used (there are alternatives such as Solena). Think of Ehereum as a special blockchain that someone maintains. For now, think of Ethereum as a special blockchain designed for NFT art. This blockchain has certain features as described in the last section, plus the ability for an artist to describe his wishes (to sell and others) in a contract, which people mostly called a "smart contract". NFT blockchain allows people to store their digital art and the particulars of this art.
In addition to the art work, you usually put in information such as
title of the work
royalty required (for secondary sales)
Once you have entered the information, you cannot change it. You can also decide to "mint" as many copies as you want for the same piece of digital art.
In addition to Ethereum, you can also use technologies based on Solana, Polygon, and Cardano. (Just to throw some names out so that when we see them again in the future, they would look more familiar.)
There are the nuance that you will need something called a crypto wallet and market place for you to complete the whole process, but we won't go into those details here.
Will talk more why and how decentralization is related to this in the next blog. Talk soon.