The Amazing Technology Behind NFTs and Why It’s Important To Web 3

What do people mean when they say they are into NFTs for the technology? Why is this so important and what does this have to do with web 3? Although NFT tech can be a bit tricky at first, its actually simpler than you think.

All it takes is a little bit of time and patients to understand this complicated industry. With that in mind, here is a quick round up of the main technology behind NFTs and how this is beneficial to the development of web 3.

Lets start with what NFTs actually are.

Put simply, an NFT is just a digital asset that you can own, such as a picture or a piece of writing. That asset has to be stored somewhere, so it is kept on a platform called the blockchain.

The blockchain is not technically a platform, though. Its actually a digital ledger that logs all the data surrounding these digital assets, such as when the asset was sold and to whom. This is much the same as a company ledger which records all their sales over a set period of time.

Now we understand the blockchain a little better, lets get a magnifying glass and look closer at how this data is stored.

NFTs are backed by something called a smart contract. Smart contracts are really important to web 3 and have been evolving over the last few years. The use of smart contacts has enabled users to revamp business models and generate new forms of business.

For example, Bacon Protocol uses smart contracts on the Ethereum blockchain to lend money for mortgages. People with a home that meets the companies criteria can use an NFT as collateral to borrow money, and users can lend money and earn interest from the protocol.

The suggests the technology behind NFTs are actually paving the way for web 3s future.

NFTs use smart contracts as a digital sales agreement between the buyer and seller of the asset.

The smart contract allows the seller to set rules and terms for the sale, such as any royalties they want to receive on secondary sales. When someone buys this NFT, the contract ensures these terms and conditions are met and then records this sale on the blockchain. It will also execute any terms afterwards without using a middleman.

This means a smart contract is totally decentralised once it is on the blockchain.

A smart contract is a programme made of if and when statements that will activate when a condition of the contract is met. When an NFT is sold, the transaction data is compressed and coded into something called a “block”. This block also contains the NFTs unique identifiable number and the smart contract associated with it. The block is then attached to the previous block on the blockchain and the NFTs unique identifiable number can now be tracked. For example, if you wanted to track an NFT on the Ethereum blockchain, all you need to do is head to etherscan.io and search for a wallet address, block, token, transaction or ENS.

This method of storing data is more secure than previous web 2 methods because a block cannot be changed once it has been added to the blockchain (not without…