Question: What are NFTs?

Answer: NFT stands for Non-Fungible Token. Non-fungible means it is unique and cannot be replicated. A bitcoin is fungible in the sense that they are all the same. A one of a kind football trading card would be non-fungible and derives value from its scarcity.

So a non-fungible token is a non-interchangeable unit of data stored on a blockchain, that can be sold and traded. Examples of data types that can be put on the blockchain as NFTs include many types of digital files including photos, videos & music.

The very first NFT was created by Kevin McCoy and Anil Dash in 2014. It consisted of a video clip made by McCoy's wife, Jennifer. McCoy registered the video on the Namecoin blockchain. At the time they referred to the technology as "monetised graphics". NFTs started to receive more interested when the ERC-721 standard appeared in 2017, it was later that same year the famous Cryptokitties website appeared which sold tradable cat NTFs.

The vast majority of NFTs make use of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or litecoin, but its blockchain also supports these NFTs, which store extra information.

NFTs claim to provide a public certificate of authenticity (i.e. proof of ownership), but it is early days and the legal rights surrounding NFTs are still uncertain in many countries.

The concept of creating an NFT and minting it on the Etherum blockchain is a process that many creator of artworks and music have already dabbled with – however you must be very careful when investing in NFTs – OpenSea (the worlds largest NFT marketplace) announced recently that 80% of all the NFTs for sale on its platform were scams – you have been warned!

The current Chancellor of the Exchequer in the UK, Rishi Sunak is getting in on the act and announced recently that they are to launch a non-fungible token (NFT) through the Royal Mint as part of a drive to make the UK a "global cryptoasset hub"!

In the future NFTs could also represent individuals’ identities and even property rights.

Question: Was bitcoin the first cryptocurrency?

Answer: Bitcoin (BTC), launched in 2009, is certainly the largest (by market capitalisation) and most well known cryptocurrency in the world today. However there were a number of other unsuccessful attempts to create digital money.

Back in 1989, a well known American Cryptograher called David Chaum created eCash and launched his company DigiCash, sadly the company went bankrupt in 1998, however a lot his technology was to be used in later attempts at creating a digital currency.

Just as DigiCash was going bust, an accomplished computer engineer called Wei Dai created B-Money in 1998 – it was in his own words “an anonymous, distributed electronic cash system”. He was unable to raise enough capital to get it going and it was never launched – however Sataoshi Nakamoto referenced elements of the B-Money system in his white papers around 10 years later.

In 1996 Douglas Jackson and Barry Downey created E-gold – it was adigital currency system backed by gold reserves in vaults in both London and Dubai. While they made efforts to counter the criminal use of E-gold, they were ultimately found guilty of running an unlicensed money transmission enterprise, and the venture was shut down.

In 1997 Adam Back (the current CEO of Blockstream) invented Hashcash which is still used in the bitcoin mining process today. This proof of work system was initially designed to try and limit email spamming and denial of service attacks. Once again Satoshi Nakamoto refers to Adam Back’s Hashcat algorithm directly in the now famous 2008 bitcoin white paper.

Again in 1998, another smart computer scientist by the name of Nick Szabo developed “Bit gold” – once again it was never implemented although it was the closest to the current bitcoin architecture.

Although Satoshi Nakamoto is rightly credited with the creation of bitcoin it is clear he was standing on the shoulders of giants.

email your questions to crypto@theportugalnews.com

By Stephen Whitelaw (https://bringbackmycrypto.com)