Non-fungible tokens (NFTs) are the latest blockchain craze. But do you know what they are? We live in an era in which emerging technologies never stop introducing new terms to our vocabulary as they reshape our society. While some of them are too specialized to be discussed in the mainstream, there is one technology whose vocabulary is as likely to be heard in a business meeting as in a bar conversation. We are talking, of course, about blockchain.  Today we will be analyzing the latest blockchain craze: fungible and non-fungible tokens (also known as NFTs). But first, let’s start with a very simple but effective explanation of blockchain.  What makes blockchain so popular is that it allows people to hold digital assets that are impossible to counterfeit or duplicate, without a single entity controlling the system. On the internet, a photo or any other file can be duplicated any number of times and sent to different recipients who would never know how many duplicates of that photo existed and who had them. This is why it has been impossible so far to transfer value through Internet networks; and why it has continued to use legacy financial railways.  But once you have a technology that allows digital assets to bear the same characteristics as money (durability, transportability, fungibility, scarceness, convenience, counterfeit resistance, etc….), it opens the way for value (not just money) to be transferred directly over the Internet, without any need for legacy infrastructure.  This brings us back to the topic of this article, tokens. Tokens have been everywhere in different forms for a long time (think casino chips or tickets to attractions), and digital tokens are not that different. Specifically, they can be seen as accounting systems that serve a specific use within a certain context. Multiple features can be built upon tokens’ accounting capability to serve different use cases, from holding reputation to voting rights, or access to a concrete service or platform.  Now, let’s focus on the difference between fungible and non-fungible tokens by understanding the word “fungible”. According to the Merriam Webster Dictionary, fungibility means:  1. Being something (such as money or a commodity) of such a nature that one part or quantity may be replaced by another equal part or quantity in paying a debt or settling an account Oil, wheat, and lumber are fungible commodities. fungible goods 2. Capable of mutual substitution: Interchangable … the court’s postulate that male and female jurors must be regarded as fungible — George Will 3. Readily changeable to adapt to new situations: Flexible Managers typically use more than a hundred different lineups over the course of the season. Batting orders are so fungible that few players last long in one spot. — Tom Verducci Let’s use a simple example to illustrate the difference: if I have a cinema ticket and I can’t go, another person can use the ticket in the same way I would have used it – cinema tickets are interchangeable. But if we are talking about a plane ticket, only the original passenger can use it – a plane ticket is unique and not interchangeable. I can exchange my cinema ticket to see a different movie: cinema tickets are fungible tokens. But I can’t exchange my plane ticket to fly somewhere different: plane tickets are non-fungible tokens. Money is fungible: I can easily exchange a US$100 bill for another, but if I try to exchange a piece or art for another, things get tricky: art is non-fungible. Let’s take the analogy to the digital field. If I have 1 bitcoin, I can easily exchange it for another bitcoin without any loss of value, but if I own a piece of digital art, it is not necessarily meant to be exchangeable for another piece of digital art. This takes us to one of the most common use cases for non-fungible tokens: the representation of ownership for digital artwork.  What makes tokens non-fungible is that they have unique attributes (or meta-data) linked to them, and those make them different and irreplaceable (in the case of the plane ticket, the key attribute would be the name of the passenger). For digital artwork, the link/location where the piece of art is stored, and the author who uploaded it (created the NFT) can be traced back to prove authorship.  Art and collectibles are two of the more simple and expanded use cases for NFTs, but the ability to have digital assets which can contain metadata opens up the field for a plethora of other applications, among which:  Gaming: This is another hot area for NFTs: you can represent avatars, weapons, or capabilities in the form of NFTs that can be traded within a game.  Finance: You can have bonds in the form of an NFT whose holder receives the yields of the bond in the same address that holds the NFT.  Tickets and certificates: They can be represented as NFTs to authenticate and preserve their ownership and exercise the rights derived from it.  Luxury fashion: NFTs are increasingly being used to fight counterfeiting in the luxury fashion industry by attaching a Non Fungible Token issued by the luxury brand to any item (such as a pair of shoes).  Content creation: Ashton Kutcher and Mila Kunis recently launched an animation series, Stoner Cats, which only the holders of an NFT representing one of the characters were able to watch.  Climate change and NFTs  There are two angles here exercising opposite forces:  On the one hand, NFTs have an enormous CO2 emissions impact because of the energy-intensive process of creating them in the blockchain where most of them are created and traded, Ethereum.  As of April 2021, the creation and trading of NFTs on Ethereum has caused an estimated footprint of nearly 150,000 tons of CO2, the equivalent of 70,000 roundtrip flights from New York to London. Some NFT platforms, such as Aorist, are built on blockchain networks that do not rely on massive energy consumption, like Algorand. But the reality

Learn about the most common myths about blockchain technology.   Myth #1 Blockchain = Cryptocurrencies The first myth is that Blockchain = Cryptocurrencies. This statement is incorrect, since Blockchain has many more applications apart from cryptocurrencies, such as tokenization or the registration of documentary evidence. Besides, there are some cryptocurrencies that use DLT technologies other than Blockchain. At ClimateTrade, each carbon credit of the projects published on the platform are tokenize and register, and the modifications that occur on them are registered. Myth #2 Blockchain for everything The second myth is that Blockchain can be applied to absolutely everything. This is something that is often read in the media and among many communities. However, to take full advantage of Blockchain technology and to provide a differential value regarding traditional database technologies, transparency and immutability needs are key points to consider, as not all applications have those needs. At ClimateTrade, Blockchain technology is used to guarantee the traceability and transparency of all operations on the platform. Myth #3 fast and anonymous The third myth is that Blockchain is fast and anonymous. The speed of a Blockchain network depends on the implementation. The capacity of newer networks like Algorand is notably superior compared to older networks like Bitcoin or Ethereum. On the other hand, all the operations carried out in the majority of Blockchains are traceable and identifiable to the different “wallets” that although they are totally anonymous at the start, as operations are carried out, a profile can be created regarding that account; therefore, to achieve anonymity, it is essential to be very careful with how these tools are used. Want to offset your carbon footprint? ClimateTrade is an expert in blockchain and has a team capable of working with the latest technologies. To learn more about blockchain technolgy, click here.

This post will cover how blockchain technology works, the advantages it presents, as well as its disadvantages. It is easy for newcomers to mix up cryptocurrencies and blockchain. Although the first blockchain (Bitcoin) is a cryptocurrency, it does not necessarily mean all blockchains are (or will be) necessarily used as payment networks. Blockchain technology has unique properties without which we would not be able to guarantee such a high level of transparency, decentralization and immutability. If you do not understand yet some of the concepts do not worry, we will explain them to you step by step. The following concepts, constitute the foundation of blockchain technology and we will go over them without getting too technical on the implementation details: Distributed ledgers Consensus mechanisms Mining Public and private blockchains Blockchain platforms Distributed ledgers What is a ledger? Today, vast amounts of information are controlled and managed by institutions that we trust to act honestly. Blockchain technology enables a shift from today’s centralized repositories of information to more decentralized robust fault tolerant networks. Using blockchain technology, it is possible to imagine a future where we do not rely on centralized organizations to manage our data but we, the users, have greater control of our digital lives. So how do blockchains enable this? It starts with simple accounting. Ledgers are data sources that track accounts and balances of assets, they are fundamental to accounting and tracking value. Today most ledgers are maintained in databases run by central authorities such as banks, credit card companies or governments. Record-keeping by central authority is beneficial for several reasons: A central authority can maintain data integrity by restricting access to the ledger to authorised users. The data location is known and accessible to the data curators this allows for fast retrieval and regulating access to the data.     Updates to a database are known as “transactions”. The following are key properties for a database transaction  : Transactions need to be atomic (where all updates are applied to the ledger or none of them are). Transactions need to be durable, meaning they persist in the system and there is no chance of the change being reverted. Transactions need to be consistent. Ledger data must be modified in a reliable permitted way. They also need to be isolated. Transactions must be isolated one from another. Recently, distributed ledger technology has gained popularity. Distributed ledgers do not rely on a central authority to maintain data. Maintaining agreements among the shareholders of the ledger is a difficult problem. Data integrity can be maintained using public/private key cryptography which can verify who initiates transactions and that they are authorized to do so. Transactions in a distributed ledger must have the same properties as a centralized ledger, they must be atomic, durable and consistent. Accessing the latest data often takes longer in a distributed ledger system than a centralized one, because it takes time for the participants to agree on the ledger’s state. Therefore the latest transactions are not immediately available to every node (participant in the network). A ledger is distributed when it has been securely replicated across geographic locations. Some features of DLT include: Consensus formation Peer-to-peer protocols Cryptographic infrastructure Blockchain technology is a version of distributed ledger technology. It implements these features through a specific  data structure called a “blockchain” and consensus mechanisms such as proof of work, proof of stake, delegated proof of stake, proof of authority, etc.   To know about ‘Why does ClimateTrade use blockchain technology to offset carbon emissions?’ click here.