Previously, we discussed what NFTs do and how they work. In this module, we'll be exploring what actually makes up an NFT.
An NFT can be split into three parts: the token (A), the metadata (B), and the visual/asset being represented (C).
Part A is the cryptographic token itself, containing a link called a Uniform Resource Identifier (URI) pointing to Part B.
Part B contains metadata with properties such as the NFT name, image pointer, traits/classifications, and descriptions. Part B contains another link pointing to Part C.
Part C is an external link that stores the image/asset being represented by the NFT.
*Note: metadata refers to data that describes other data. In the case of NFTs, these are often stored in .JSON formats.
Let’s explore each part!
Part A is the actual non-fungible token (NFT) that is unique. Each NFT has a pointer inside, called a URI, that leads to metadata (Part B) describing a list of the NFT's properties.
An NFT’s properties usually include the things under Part B.
If you’re still confused about what metadata is, maybe this could help! The metadata of an NFT describes everything about it. Take, for example, an NFT representing a concert ticket, it might include the artist, seat, and type of the ticket.
"name": "Justin Bieber Live in Manila (VIP)",
"description": "Justin Bieber is bringing his Justice World Tour to the CCP Open Grounds on October 29, 2022",
Basic structure of an NFT metadata based on the concert ticket example.
This part is where the visual or asset is stored. Part C can be something as simple as a Google Drive link to something more complex like the IPFS or InterPlanetary File System.
Side note: Not all NFTs are created the same. The structure of its parts will differ from other types of NFTs. We outlined above the basic structure of the most common NFTs used in the Ethereum blockchain.
Now, you might be wondering: where are these parts stored? Part A, the cryptographic token itself, is stored on the blockchain, which is transparent, immutable, efficient, and decentralized.
Parts B & C can be stored on-chain, meaning inside the blockchain, or off-chain, meaning outside the blockchain. However, storing Parts B & C on-chain isn't usually done due to the blockchain's limited memory space, making storing bigger data like the metadata and visual/assets extremely expensive.
Off-chain storage for Parts B & C can range from a distributed storage system like the IPFS to a simple Google Drive. Knowing where Parts B & C of your NFTs are stored off-chain is essential to understand due to the implications this may have on the integrity of your NFT. We’ll discuss this more in our “Limitations of NFTs” module.
In March 2021, iconic NFT artist Beeple sold his artwork named EVERYDAYS: THE FIRST 5000 DAYS at Christie’s for a whopping $69 million. You can find this tokenID on the auction house’s website, which, when searched in a blockchain explorer, will give out an IPFS URL containing the metafile.json file or metadata. Furthermore, this contains a URL to the actual NFT artwork image. How cool is that?
The process of making an NFT can be broken down into four simple steps. However, before we discuss how an NFT is made, we must first understand what a smart contract is, the program that makes everything possible.
Smart contracts are the ‘if-and-then’ statements of the blockchain. They are programmable code that automatically gets executed when predetermined conditions are met. An example of a smart contract is a program that sends 0.05 BTC to a certain wallet daily at 11:15 AM. We’ll be diving into the topics of smart contracts in another course, but for now, this is all you need to know!
Now that we know what a smart contract is, we can check out how an NFT is created in 4 simple steps!
Now that you know what makes NFTs unique and how they work, let's look at their different properties.