What is NFT technology?

What is NFT technology?

This article is about NFTs (Non-Fungible Tokens).
The purpose of this article is to explain the technical features in an accessible way.
“Eliminating jargon to the greatest extent possible, this explanation focuses solely on the essence of NFTs.”
ハッシュ値という単語すら使わないよ！

・What NFTs can do
・Things NFTs can't do
・Blockchain reliability
・Blockchain and Environmental Impact

Detailed technical explanations for experts.
About buying and selling NFTs.
・The culture surrounding NFTs
・NFTで儲ける方法(むしろ教えて欲しい)

NFT stands for "Non-Fungible Token."It is translated as "non-fungible token" in Japanese.
This is an excellent abbreviation that succinctly and accurately captures the essence of NFTs.
However, few people might understand the nature of NFTs just by hearing this word alone.

Many people might think NFTs are something complicated and troublesome.
まあ、数学的に正しく理解するのは非常に難しくて面倒なのですが・・・
However, the essence of NFTs is very simple.
NFTs can only do the following.


This is everything about NFTs.Neither more nor less.
Congratulations!　"Now you won't have to struggle with not understanding NFTs!"

... Readers' "?"？？？？"I've been hearing a cry from the heart, so let me explain a little more."

Suddenly, a person with the bizarre name "0x8db1342F" appeared.
Who exactly is "0x8db1342F"?　I think that's a perfectly reasonable question.
Let's start with the conclusion."I have absolutely no idea who is!"

"“0x8db1342F” is like an email address."
"Just like you can write and send a new email from an address like "abcdefg@dot.com,"
"It appears that a new NFT is being issued from the address '0x8db1342F'."

An email address alone doesn't tell you anything about who someone is in the real world.
The NFT addresses are the same.I have absolutely no idea who "0x8db1342F" is.

And,
"It's completely baffling as to who "0x8db1342F" even is."
The NFT "0x012317a1" was issued by "0x8db1342F".
It could also be said that it's not much different from graffiti you'd find anywhere.

"After all, a scribble by an unknown artist has no value, doesn't it?"
"Similarly, an NFT whose issuer is unknown has no value, right?"

NFTs are essentially certificates of ownership with an unknown issuer.
It is verifiable that the NFT "0x012317a1" was issued by "0x8db1342F".
Nothing else has been proven.

As explained in the previous section, an NFT is a certificate of ownership where it's unclear who issued it and to whom it belongs.
It's like an antique comes with a certificate of authenticity whose author and origin are unknown.
A certificate of authenticity with no discernible author holds no value.
"It's meaningless unless it's certified by a reputable appraiser or an authoritative organization."

Conversely, "0x8db1342F"
If it's clear that they are a celebrity or a reputable organization,
The NFT issued by "0x8db1342F" is a certificate with endorsement from a celebrity.

However, it cannot be verified with just NFTs who "0x8db1342F" actually is.
You must combine real-world information and prove it.

For example, a famous manga artist used an address "0x8db1342F".
We will issue a limited-edition NFT with a newly created image of "The Little Man Who Went Backwards," our representative work.
Let's say they announced it on their own social media accounts, and the NFT was issued accordingly.

"At this time, factors such as having a verification mark and being linked from the publisher's official website..."
"If it is certain that the SNS account is the genuine account of the author of 'Retreating Child,'"
It is certain that "0x8db1342F" is the author of "The Little Retreat."

Therefore, the NFT "0x012317a1" issued by "0x8db1342F" is...
"It is indeed an NFT with original artwork, issued by the author of 'The Little Man Who Went Backwards'."

Essentially, the NFT "0x012317a1" was issued by "0x8db1342F".
It seems the certificate of authenticity by the author is included with the original artwork by the author.

"This guarantees that the NFT "0x012317a1" was issued by the author of "The Little Backslider" themselves."
"has equivalent value to a signed paper with an original illustration by the author himself,"
It can be considered.

"In this way, NFTs can only prove the information contained within the NFT itself."
To find value or meaning in something, it must be connected to information from the real world.

So far, NFTs have proven the issuer's NFT address, and
I explained that verifying the identity of the owner of that NFT address requires proof from sources other than the NFT itself.

However, NFTs don't just verify the issuer's NFT address.
It also verifies the owner's NFT address.
With this feature, NFTs have moved beyond being simple certificates and become tradable certificates.

Assuming that the NFT address you are using is "0x317012a1",
"User 0x317012a1 has paid a certain amount for..."
Let's say you purchased the NFT "0x012317a1" issued by "0x8db1342F" ("the author of 'The Little Retreat'").

At this time, the following simple changes will be made to NFT "0x012317a1".


That's all there is to it.That's what NFT trading is all about.

At this time, you are paying the price in the real world.
There is no direct relationship between paying for goods and services in the real world and trading NFTs.
Whether it's a credit card, cryptocurrency, or cash,
Whether it was exchanged for jewels or freely transferred, it doesn't matter from an NFT perspective.

The issuer and current owner of NFT "0x012317a1," "0x8db1342F,"
That's it - I'm just adding "0x317012a1" to the ownership history of NFT "0x012317a1".
NFTs only prove that ownership has changed.
まあ、暗号資産の場合には、支払いとNFTを関連付けることもできますが・・・

This means that "0x317012a1"
We can verify that you are the ultimate owner of the NFT "0x012317a1" issued by "0x8db1342F".

And NFT-based proof is virtually tamper-proof.
There's absolutely no concern about hacking or counterfeiting.
That you are the ultimate owner of NFT "0x012317a1".
"It will be proven forever as long as the NFT network exists."





Now, "0x317012a1" (you) have officially become the final owner of NFT "0x012317a1".
"Someone with the address '0x4260020' has offered to buy this NFT from you at a price higher than what you purchased it for."

"If you are satisfied with the amount presented by '0x4260020', the transaction is complete."
You received the offered amount from someone using the identifier "0x4260020" through some means.
We are adding "0x4260020" to the ownership history of NFT "0x012317a1".
With this, you will have made the difference in amount.Congratulations!

Regardless of how money moves in the real world at this time, the NFT itself will undergo a simple change.


The key is the "last owner history."
In NFTs (blockchain), a new owner's address is added each time ownership changes.
"That is to say, at this point, the NFT "0x012317a1" has the following ownership history recorded."


The issuer of an NFT is also its original owner.
The NFT issuer, "0x8db1342F" ("The Retreating Sprite" author), is recorded as the initial owner.
"Behind it, subsequent owners would be added on, seemingly like an endless chain."
The last owner is the current owner.
法律上の所有の概念とは異なるのですが、わかりやすさのために所有と表現しています

Essentially, no matter how many transactions the NFT "0x012317a1" undergoes from this point forward,
The record remains that the NFT issuer is "0x8db1342F" (the author of "The Retreating Little Person").
We can continue to prove that this is an NFT issued by "0x8db1342F."

So far, this explanation establishes that NFTs are essentially just records of transaction history.
I hope you kind of understood.
To be honest, NFTs (blockchain) are nothing more than a simple transaction ledger.

However, once you understand that, new questions will arise.
Just recording transaction history... is that really a big deal?
That's easy."Isn't it a bit of an overreaction?"　It's only natural.

Actually, you're right.It's very simple if all you need is to record transaction history.
"It can be done simply by listing the owner addresses in Excel."

The following is an example of a transaction ledger created in Excel.
If it's a transaction within a trusted circle, this will work fine.





However, that's not enough when dealing with a large and undefined group of people.
Because someone might arbitrarily alter the transaction ledger.
Without a virtually impeccable ledger, dealings with unreliable parties cannot occur.

Actually, there are two solutions to this problem.
One is that a sufficiently trustworthy organization operates a transaction ledger.
Another one is sharing transaction ledgers globally.

Let's start by explaining the scenario where a sufficiently trusted organization operates a transaction ledger.
This is a very common method, and most online transactions are done this way.

For example, the author,
From Sohrinsha, an ebook retailer,
Let's say you bought volume 3 of the popular manga, Juntai Residence.

At that time, the information that "[the author] purchased Volume 1 of Junten Housing" would be recorded in So Rinsha's server transaction log.
Therefore, only So Rinsha can prove that the author purchased Volume 3 of Junkansou.
Organizations other than Soh Rinsha are unaware of this and cannot prove it.





Therefore, Sholinsha might accidentally destroy the server due to operational error,
Due to external hacking, portions of the transaction ledger have been deleted.
"If Sholin-sha were to intentionally delete the author's purchase history from their servers,"
"The fact that the author bought volume 3 of Junkai Residence will become irrefutable and impossible to prove to anyone in this world."

Essentially, something like that wouldn't happen because Sholinsha is a reliable and established company.
“The transaction is occurring based solely on credit to a specific organization.”

For a standard transaction, this is sufficient.
However, this method means that all transactions will be conducted under the management of Korin.
People want to be able to freely trade free things in a free way, but they can't.

So, in NFTs (blockchain),
To reconcile free trading with ledger integrity, we have adopted the latter approach.
Essentially, the NFT transaction ledger is shared among organizations worldwide.

In blockchain, different organizations around the world each maintain their own servers and operate a transaction ledger.
New transactions are sent to and recorded on servers worldwide, identically.
Tens of thousands of servers around the world are managing the exact same transaction ledger in precisely the same way.
もちろん、それだとムダが多いので、実際にはもうちょっと効率よくやっていますが





Therefore, even if the transaction ledger of one server is rewritten through hacking,
"You could definitely spot it as a hack if you compared it to the transaction logs of tens of thousands of other servers."

"To alter transaction history through hacking,"
We need to simultaneously hack more than half of the tens of thousands of servers worldwide.
"Even a hacking group with multiple brilliant hackers couldn't do that."
わかりやすさのためにハッキングと書いてます。クラッキング派の方も、ご理解いただければと思います。

In a nutshell, NFTs (blockchain) are essentially a transaction ledger with always having tens of thousands of backups.
We always have tens of thousands of backups, so a server failure wouldn't be a problem at all.
Tens of thousands of servers around the world are simultaneously hacked, fail, and bug out.
That is practically unthinkable, and its reliability is maintained by having extensive backups.

And furthermore, those tens of thousands of backups are managed by different organizations.
Therefore, even if an administrator of one organization went rogue and altered transaction history,
"It would be quickly detected when compared to the transaction logs of tens of thousands of other servers."

Even if you were to consider bribing a server administrator to alter transaction records,
We won't succeed unless we acquire tens of thousands of managers worldwide simultaneously.
Of course, that's practically impossible.

"And because the transaction ledger is shared globally, it doesn't rely on any single organization."
If you follow the correct procedures, anyone can participate in transactions and trade freely.

And the correct procedure is mathematically guaranteed.
You can only trade with mathematically sound procedures.Anything with incorrect calculations is a fraudulent transaction.
No matter how powerful someone is, they cannot defy mathematics."We can only trade using mathematically sound procedures."
数学的に保証ってホント？って思う人は、ハッシュ値でググってみてね！

With this mechanism, NFTs (blockchain)
"We have successfully achieved complete compatibility between the high reliability of the transaction ledger and the free trading of an unrestricted number of people."
"It's free for countless individuals to trade, unbound by any specific large organization!"

So far, the explanation suggests that an NFT is nothing more than a simple transaction ledger, but
thanks to blockchain technology, it is a trustworthy and accessible ledger for everyone.
I hope you kind of understood.

By the way, when it comes to NFTs, you often hear them described as "non-replicable" and "non-fungible."
What does it mean for an NFT that is essentially just a ledger entry to be described as "不可複製" (不可複製) and "非代替性" (non-fungible)?

Actually, this is quite simple too.
As initially explained, everything about NFTs can be described as follows.


The important part here is the NFT "0x012317a1".
This is an NFT address (NFT ID), and all NFTs can be distinguished by it.
NFT “0x012317a1” is one of a kind.

If "0x8db1342F" wants to, they can issue as many NFTs as they like.
And each newly issued NFT will have a unique NFT address (NFT ID).


Let's assume that at this time, NFT "0x012317a1" and NFT "0x0731a112" have the exact same image.
Nevertheless, NFT "0x012317a1" and NFT "0x0731a112" are different NFTs.

NFTs are distinguished solely by their NFT address (NFT ID).
NFTs can have images, videos, audio, and all sorts of other data attached to them.
It's also common for many NFTs to be created with the exact same image.
However, even if the images are exactly the same, they are considered different NFTs if they have different addresses.

This means that the NFT "0x0731a112" can never be a substitute for the NFT "0x012317a1."
even if the content (the attached image) of the NFT were exactly the same.
No matter what, NFT "0x012317a1" is NFT "0x012317a1".
An NFT cannot be substituted with another NFT.That is, substitutability has been achieved.

This is analogous to how, in the real world, even cards with the same design are physically distinct objects, one by one.
NFTs are a digital replication of the characteristic of real-world items, where each one is unique.

Actually, it is possible to copy (reproduce) NFTs.
It's easy to copy the NFT "0x012317a1", create an NFT "0x012317a1", and add it to the transaction ledger.
Here's the transaction record for attempting to copy the NFT "0x012317a1" and create a new one.





However, this would immediately reveal that there are two NFTs with the same address.
Therefore, it will quickly become apparent that one of them is a copied NFT.

And, as explained in the previous section, NFTs (blockchain) always have tens of thousands of backups.
Compared to the tens of thousands of other backups, it would quickly become apparent that the NFT is a copy.
Copied NFTs won't be traded by anyone.It's a useless, worthless NFT.
Copying an NFT might only bring you fleeting satisfaction.

Furthermore, you can also extract the image attached to an NFT and copy the image itself.
"I can, but it's just a simple image file."
It's just an image, not an NFT, so there's no way to trade it.
Copying just the image of an NFT is nothing more than a self-satisfying act.
まあ、画像をながめるだけで満足であれば、それでもいいかもしれませんが・・・

Furthermore, it's also possible to extract just the image from an NFT and attach it to a new NFT for issuance.

For example, someone like "0x0987c53a0,"
"Extract just the image of "後退の小人" from the NFT "0x012317a1" issued by "0x8db1342F"."
Let's attach an image to the newly issued NFT "0x8eab81a0".

This is a correct NFT as an NFT.
You can seamlessly add to and trade on the NFT marketplace without any issues.
"We can, but... since the issuers are different, it probably won't be worth even a single yen."

The issuer of the NFT "0x8eab81a0" is "0x0987c53a0".
As explained in the preceding sections, this is effectively proven by NFTs.
By the way... who is "0x0987c53a0" in the real world?

I don't believe someone I don't know, "0x0987c53a0," has the right to sell the image of "the Little Backpedaler."
Therefore, it will quickly become apparent that the NFT "0x8eab81a0" is a copy of another NFT.
“It’s the same as a signed paper created by illegally copying an illustration by a famous manga artist and then signing it.”
I doubt such a thing would fetch a high price.

"While it may be possible to copy an NFT and create a copy,..."
"Because the issuer's address is fully verified,"
The greatest strength of NFTs is their ability to differentiate between a copy and an original.

However, an NFT itself is simply a ledger of transactions.
Ultimately, an NFT is just this much data.


The information of NFT issuers is fully recorded on the transaction ledger, making it impossible to impersonate an issuer.
発行者が大ポカをやらかして発行者のaddressがハッキングされない限りは・・・
However, creating NFTs that are simply copies of the content of other NFTs, such as images, is not difficult.
And it's impossible to determine whether an NFT is original or a copy solely based on the NFT itself.

There's no alternative but to determine it by real-world realities outside of the NFT.

Even if the NFT "0x8eab81a0" featured an image of "a little figure of retreat,"
Is it an NFT issued by the author of "The Retreat of the Little People" or the publisher of "The Retreat of the Little People"?
"It's something that can't be determined by NFTs alone."
The only thing NFTs tell you is the issuer's address, which is "0x0987c53a0."

Therefore,
Check the author's own social media account.
Check the publisher's official website.
Verify it's featured on a reputable news site.
Make sure it's clearly marked on the books displayed in the bookstore.
Sold on a reputable website by a trustworthy company.
run by a large community
We can only refer to and verify information from the real world.

NFTs aren't complete on their own.

We have covered the technical aspects of NFTs in the preceding sections.
However, when discussing NFTs (blockchain), one crucial element remains unaddressed.
That's its high environmental impact.

It is said that blockchain technology has a very high environmental impact.
This will be immediately clear if you recall the content of the preceding paragraph.

In blockchain, tens of thousands of servers are constantly managed by different organizations.
And the content recorded on those tens of thousands of servers is essentially identical.
Basically... they're intentionally managing something that one organization should normally be able to handle with a single server, using tens of thousands of servers instead.
「サーバーの台数」というのは非常にあやふやな概念なのですが、ここではわかりやすさのために台数でDescriptionします

Do you understand now?
Essentially, what it means is that we're managing a workload that could normally be handled by a single server, but we're distributing it across tens of thousands.
It means we are wasting tens of thousands of times more electricity.

However, the actual waste might be even greater than what we thought, far exceeding just tens of thousands of times.

Blockchain enables organizations to share transaction histories between their servers.
We are verifying the accuracy of transactions by performing extremely complex calculations.
"This is essentially an unnecessary calculation if a single organization manages it on a single server."
"Blockchain consumes massive amounts of electricity as a trade-off for its high reliability and permissionless trading."

Blockchain continues to be improved year after year, and has a lower environmental impact than it used to.
The fundamental principle that reliability is maintained by always having tens of thousands of backups remains unchanged.
If a time were to come when the world's 7.8 billion people were conducting transactions daily on blockchain,
The electricity required to operate blockchain networks may deplete Earth's resources.

Therefore, it doesn't mean we should apply NFTs (blockchain) to everything.
"Managing transactions on a blockchain can achieve a high level of trust."
"Is it worth it, considering the massive number of servers and the huge amount of electricity required?"
This often proves to be a challenge.