NFT Basics
NFTs (non-fungible tokens) are all the rage these days; but understanding exactly what an NFT is can be challenging. This article, 7 Things You Should Know about NFTs, is a good place to start learning about NFTs. Another moving piece of the NFT puzzle is staking. I am still trying to get my head around staking.
Understanding NFTs is easier when you understand the characteristics of an NFT. This article, What Are NTFs and How Do They Work points out these characteristics:
- Non-interoperable: NFTs are unique and unlike fungible tokens which are all the same basically and any one is just as good as any other; NFTs are not interchangeable.
- Indivisible: NFTs cannot be divided into smaller denominations.
- Indestructible: NFTs are stored on the blockchain and can never be destroyed.
- Verifiable: Because NFTs exist on a blockchain they can be traced back to the original creator.
This video, Could Enjin SUPERCHARGE Gaming NFTs?! (at minute 6:50) points out three aspects of determining value of an asset:
- Rarity: How scarce is it?
- Provenance: Where did it come from?
- Quality/Utility: How good is the asset or how good does the asset serve your specific needs?
Machine-readable metadata can be turned into an NFT. What is an example of machine-readable metadata? All the rules that I have created for US GAAP and IFRS can be turned into NFTs. Why? Because the rules are useful in verifying an XBRL-based financial report has been correctly created.
Here are high-level rules for US GAAP and IFRS that could be turned into NFTs. That is only the tip of a much bigger iceberg.
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Next Generation NFT for Everyone (ENJIN)
Charlie
in Digital Financial Reporting
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