Comprehensive overview of NFT smart contracts
Smart contracts play an important role in numerous cases in the blockchain space.
The attention of the Metaverse and Web3 is increasing day by day, and the importance of NFT smart contracts is even more prominent.
The following is a quick explanation of the concept, operation principle and use of NFT smart contracts.
Learn why NFT smart contracts are “smart,” how they work, what features they have, and what current and future use cases these smart contracts have.
Do you know that NFT runs on the blockchain and is managed by smart contracts?
NFT buying and selling basically rely on smart contracts to execute transactions.
Learn more about this reliable software solution and how it can help verify ownership, combat counterfeiting, and more.
What is a smart contract?
Smart contracts are programs stored in the blockchain that automatically perform specific actions when predetermined conditions are met.
In a decentralized system, smart contracts can replace the conventional intermediaries required to facilitate transactions, allowing both parties to interact.
Blockchains including Bitcoin and Ethereum use smart contracts to facilitate transactions and automate processes.
Why are smart contracts “smart”? These blocks of code automate the process without human error, radically reduce transaction time and cost compared to traditional contracts.
In addition to overcoming human error, smart contracts have other advantages that are critical to the blockchain industry.
Start trading NFTs through Binance
Advantages of using smart contracts
Smart contracts can facilitate transactions in a trustless system . That is, even if the two parties to the transaction do not know each other, the interaction can be achieved without mutual trust.
This eliminates the need for intermediaries and paperwork, increases speed, and reduces costs .
Smart contracts are immutable and cannot be tampered with after deployment, thereby improving security.
If smart contracts are deployed on a public blockchain, they are open and transparent and visible to everyone.
Smart contracts are customizable before deployment, making them versatile.
Deterministic and only perform programmatic operations.
Automated setup with no risk of human error.
However, unlike traditional contracts, smart contracts are not actually legally binding.
This means that this line of code helps enforce results on the blockchain, but cannot enforce off-chain protocols.
Go to Binance’s Official Website
Create NFTs with Smart Contracts
NFTs are created through a “minting” process.
The process involves converting images, videos, audio clips and other digital files into cryptocurrency assets on the blockchain.
Essentially, the NFT minting process is the configuration process of the underlying code of the smart contract, which determines the properties of the cryptocurrency asset.
To ensure that NFTs can easily interact with applications, several standards related to smart contracts have been developed.
For example, several smart contract blockchains come with NFT creation tools, including TRON, EOS, and Tezos.
If there is no uniform standard for the coding of smart contracts and NFTs, NFTs minted through different platforms will not be able to be traded in the same NFT market.
Smart Contract Standards for Creating NFTs
Among the many existing standards in the cryptocurrency field, Ethereum’s ERC-721 standard is the most widely used as the network’s first non-fungible token standard.
As a pioneer in the field of NFT minting, this standard is recognized by many parties for the creation and issuance of NFTs.
The ERC-721 standard stipulates that all tokens must be non-fungible and have a unique token ID, a requirement that other standards cannot enforce.
In addition to ERC-721, there is another standard that is mainly used in the field of NFT games.
The ERC-1155 standard was created to be compatible with homogenized assets such as in-game currency and non-fungible assets such as limited edition skins.
Smart Contracts, NFTs and the Metaverse
The metaverse can be seen as a 3D digital universe that connects financial, virtual and real worlds.
NFTs, blockchain games, and cryptocurrencies as we know them are all part of the metaverse.
If smart contracts are the cornerstone of NFTs, it is logical to say that they are also an important tool for building the metaverse.
For example, NFT art and games are the two most promising sectors in the current metaverse landscape, both powered by smart contracts.
Smart contracts can also facilitate currency transactions, get rid of the need for third parties, and reduce the divergence of interactions in the metaverse.
Go to Binance’s Official Website
Other NFT-related use cases for smart contracts
Strictly give ownership and verify authenticity
Smart contracts used to issue NFTs can effectively give ownership and verify data.
If the NFT is hosted on a public blockchain, the ownership information and creation time are open to everyone.
An example is the use case for a digital degree certificate.
Educational institutions can issue unique NFTs to students through a public blockchain.
Employers who want to hire these students can search for relevant block explorers to verify the authenticity of the applicant’s degree.
Such search engines are accessible to everyone to search for publicly available information recorded in the blockchain.
Smart contract use cases can also be extended to NFT licensing.
The transfer rights details of an image or audio file can be easily transferred to the next NFT token holder once created.
Anyone can verify the title and other rights granted to the buyer.
Prevention of plagiarism and forgery
Counterfeiting and plagiarism can also be effectively combated through NFT smart contracts.
Since it is created in the blockchain, the smart contract can automatically verify when and where the NFT or token was created, i.e. the first recorded wallet address.
Smart contracts can also track the ownership of creative content, combat fake certificates, and effectively curb the distribution of counterfeit products.
For example, such products will be automatically screened if certain prerequisites are not met.
Go to Binance’s Official Website
Facilitate business transactions
Smart contracts can enhance commercial transactions through the advantages of speed and security.
The role of a smart contract is to bring the parties to an agreement and to ensure that the previously agreed upon outcomes are carried out when the terms are met.
This avoids delays caused by a lack of trust, thereby increasing the efficiency of the transaction process.
Even if the parties do not trust each other, with the smart contract as the guarantee, the transaction can be executed immediately as long as the contract terms are met.
Let’s take the process of buying a property as an example.
As long as the buyer passes the credit check and successfully completes all requirements such as down payment, the smart contract will release funds to the seller and transfer ownership to the buyer at the same time.
The deed transfer included in this transaction will also be recorded on the blockchain for easy verification.
Conclusion
Smart contracts are flexible and wide-ranging, and can be applied to all industries through customization.
As one of the cornerstones of the most popular digital asset class at present, with the further popularization of NFT applications and the continuous development of the metaverse, the importance of smart contracts will inevitably increase.
What is the Metaverse?
The metaverse is the concept of the fire in 2021, and the related hype has not stopped until today.
The term metaverse was born in the science fiction novel “Avalanche” in 1992.
The novel depicts a huge virtual reality world, where people use Digital avatars come to control and compete with each other to improve their status, and so far, it describes a future world that is ahead of its time.
The current fantasies about the future world are nothing but internal and external.
The external is the expansion of the real level, going out of the earth and becoming a galaxy civilization; the internal is the expansion of the virtual level, creating a virtual world, and the latter is the ultimate scene to be realized by the metaverse.
Now going to Lenovo Metaverse to realize the scene may unconsciously be linked to the game, but the scope of the metaverse is not only games, but only technological breakthroughs are very meaningful, such as the infrastructure supporting the metaverse, VR (virtual reality technology) and AR (augmented reality) equipment, let’s take the movie as an example, “Ready Player One” needs VR, and the scene of interaction with artificial intelligence in “Iron Man” needs AR, these two technologies, and faster Internet speed, if a breakthrough is achieved, it will change the way we live.
For example, after the advancement of AR technology, we can also operate the computer in a three-dimensional way like Iron Man; through VR technology, we can also realize applications closely related to reality, such as shopping at home, no longer browsing Taobao Jingdong, Instead, you are in a virtual shopping mall. Except that the goods will eventually be delivered by real couriers, the whole process is no different from actually going to a shopping mall.
The imagination space of metaverse games is even larger. The game itself is an important carrier of human spiritual needs and has a huge market. It is a dream for many people to start a new life in a virtual world that is completely different from reality. In addition to entertainment, games also have great practical significance, such as solving employment problems, games with a grand world view, requiring a lot of manpower to develop and operate, and the production and trading of goods in games are also very economical, especially in recent years. Under the impact of the epidemic, a large number of players worked in the game through game gold and power leveling to solve the problem of survival. If both the Metaverse and WEB3.0 can be realized in the future, it will be possible to achieve cross-“world” interaction, probably just like Fantasy Westward Journey can connect to World of Warcraft, realize the interconnection of multiple virtual worlds, and jointly form a virtual “universe” .
But if only AR, VR technology and faster internet speed are realized, then the way of existence of the Metaverse will still be centralized. Compared with Tencent and META, which developed their own Metaverse products, it is the same as using their products now. Not much difference, just the way of usage becomes three-dimensional.
In general, the concept of the metaverse has already been born, and there are enough ideas. What really restricts the development of the metaverse is the technology of the real world, not the metaverse itself, which means that most of the hype about the metaverse is Cosmic-themed projects don’t have much practical value.
Please check Binance official website or contact the customer support with regard to the latest information and more accurate details.
Binance official website is here.
Please click "Introduction of Binance", if you want to know the details and the company information of Binance.
Comment by Hans
April 24, 2024
as I am trading here various assets, for me it's the most important feature. i mean, flexibility in tradable markets. i alternate trading styles, meaning that sometimes I trad...