NFT explained for web developers | How NFTs work?

in this video i want to discuss something interesting something i don't think a lot of people are covering right now on youtube or any other platform and that is how the technicalities of nfts work because i have been getting into the web 3 side getting into under trying to understand what is happening how everything is working out and i got on a call with a friend a couple of days ago who's deep into this nftn web 3 and crypto world i got to learn a lot about this whole space from him on a technical level so in this video i'm going to share my learnings from that call and in general what i have looked for so far in the nft landscape let's start with that we'll cover more topics in the web 3 world as we go along let's go if you're new here make sure you leave a like subscribe to the channel and hit the bell icon this is free of cost and helps the channel grow so for the sake of this video i'm gonna assume that you know a little bit about bitcoin ethereum blockchain just the names are fine and technically what they mean like you know transferring of coins and you know tokens stuff like this so this should be familiar to you if not then we'll probably do some other video on more basic web3 stuff let's let's talk a little bit about nft in this video because this is what i want to discuss and this is what i i think i have understood so what nft stands for is non-fungible token a non-fungible token just means something which cannot be duplicated right now this sounds fun this sounds fine and you know pretty much on any other website at this point you would just see shiny cat photos or something which is an nftn the the context the technical context gets lost right so what i want to talk about is how a picture like for example if we have a picture of code dam something like this how this could be an nft right how this could be created as an nfp so the way this works is as follows what i'm going to do is i'm going to go ahead and as a company i'm a company over here i meant a certain thing on blockchain or on ethereum right let's say i meant nft based token on ethereum and when i say i meant this basically means writing on the blockchain this ethereum is a blockchain and this minting means that i'm writing on this ethereum blockchain right now the way this minting happens is that there is something known as a smart contract which is sitting over here which monitors what exactly can be maintained how the transfer can be initiated and so on but this thing right here is a kind of a programmable blockchain or a programmable contract which resides on the blockchain itself and whatever rules you specify in this particular contract if the minting is happening on this contract because of this contract because you sent a message on the blockchain to this particular contract then the rules defined by this contract will be followed right so if i'm a company like code dam and if i want to create my own nfts on ethereum blockchain what i will do is i will create a smart contract over here as a step one and step two i would mint them on a blockchain this does not need to be ethereum in this case i'm choosing ethereum as one of the chains all right and then after this the story is simple you just transfer this nft thing to some other person thank you so much for watching and i'm gonna i'm just kidding this is not the end of the story let's talk a little bit about what happens when you transfer this nft from account to one to account two or wallet one two wallet two whatever you want to call okay so this is the place where the fun part begins well when you initiate this transfer to the second account the transaction which happens on the blockchain you know if you know about blockchain it's basically a cryptographic linked list where every single transaction this third transaction is cryptographically dependent on both of them why because the second transaction was cryptographically dependent on the first transaction right if you change anything on the block two the hashes of all the blocks in the future would change so what this transaction is is just another block on the chain hence the name blockchain right so this transaction is sitting on this block and once you do it pretty much you know other transactions also keep happening all the time but what this transaction contains as an information apart from the relevant information that is this is the account number which is this information is sent from and the send to and so on this contains a pointer now this is important this contains this sixth block over here if i expand over here this contains all the metadata for example then it contains a pointer over here which points to this nft metadata right so this is a pointer to a file over here which is a json file in a lot of cases which points to this particular nft meta data right so this nft metadata is a json file and this json file actually consists of the fields where it points to the actual file of the nft right which is actual image file which is the one which i sent you let's talk about this a bit because this is important this is block number six this block number six contains some information which points to some other url this is a url of you know something like which which hosts certain files and i'm going to talk about which this hosting is but it hosts a json file over here which is an nft metadata file and this json over here actually contains one of the fields actually contains the links to the actual image image dot jpg now the fun part over here is that this url which i just mentioned which is in this area over here this url which is the metadata and this image over here both of them are on ipfs and what does ipfs stand for ipfs stands for interplanetary file system in a lot of ways you can think about this as how torrents work right for example when you download utorrent or bittorrent or delg or any other client when you start pirating those movies or those softwares what that torrent line would do is try to find everyone else who's on the network who has that particular file and they would try to extract those particular pieces and bits of information from those computers right the only difference between which which i have seen of course i'm no expert in this area but the only difference i have seen between ipfs and this torrenting system is that ipf is of course used a lot with the blockchain part and second of all there are a lot of services a lot of third-party services like openc for example and uh you know a bunch of others have forgotten the name of a couple of you but these services what they would do is they would cash that particular asset which was on ipfs and it will keep it with themselves why because just like anything ipfs relies on all the peers to be online which contain the information and there might be redundancy systems built in and all that stuff in ipfs but the fact is that if your file is distributed to five people and only five and then four of them are down then you cannot retrieve the original file right so in this case usually this image link which is over here can be cached by a third party provider which then reads from ipfs file system anyway right so what exactly is the point of all of this well if you take a look the difference between me the company sending you this image over email versus me the company minting this first on the blockchain and then transferring it to your account is that i cannot first of all i cannot take this back because this block is already generated it is set in the stone that i have done this transaction so there is absolutely no way i can reverse this transaction and the second thing that this transaction on the block is the very proof that you own this particular piece of thing right so in this case this nft might just be you know an html logo or the code damn logo or whatever but in reality for example if you're thinking about some you know house papers or something which includes actual pdf or something which is hosted on ipfs right then if i have that information with me if i have that particular thing on the ethereum blockchain powered by the smart contract of the company which is offering that particular thing you can absolutely be sure that you know whatever i own over this chain that particular company initiated that transaction to me right and the fact that you own it because it is on the chain it is protected by all the hundreds of thousands of people who are you know mining and putting more and more blocks which is making more and more impossible for you to revert or anyone to reward this transaction means that your ownership of that particular asset which is stored in a nfp metadata file again this file is also on ipfs so don't get confused and this url which this file points to the original asset whether that's an image whether that's a video whether that's a pdf whether that's anything that particular thing is also on interplanetary file system that is a distributed file system on the you know not exactly on the blockchain on the on basically all the nodes on the earth right like bitcoin uh like bittorrent or utorrent or torrents in general so when next time somebody's sending you an nft on your account or you're trying to mint something you know that what you're exactly doing on a theoretical level right i still yet have to do this all of this stuff set up once by myself on a practical level i have not done an nft setup but the picture now is much clearer to me like how this thing overall is working and we do do this pretty much this whole mess just to ensure two things the first thing is that the ownership is permanent the block remains there forever i mean this includes the transaction is visible and ownership is permanent and the second thing is that it ensures the proof of validity because this includes the smart contract this includes the sender's address this includes the receiver's address and so on so if you can prove that you are the receiver who has access to that particular wallet or access to that particular address you pretty much are the owner of that particular piece of thing right it's actually amazing in a way if you think about it because at this point you have removed the need of a middleman right because if i am a company who you do not trust you need to get a middleman which is someone who can handle trust issues for me as well as for you right so this particular person is somebody who you also trust and i also trust so essentially this setup over here although how much complicated it might seem but this guy is no longer needed round because the moment this transaction happens you would be able to see that particular thing has arrived to you and that is stored as a block now again it does not really like you know remove all the use cases of a middleman and especially in cases where you have to do a lot of things in real world not in the digital world for example buying uh some sort of inventory right then whenever you pay for it it can still be stolen it does not mean that if it is on blockchain it won't be stolen or will be delivered right away to you so it's more about a currency of the internet and a thing of the internet not exactly currency but a thing of the internet and the all this nft non-fungible token means is that this particular image right here is the image which is pretty much pointing to only one particular thing on the block you know one particular assets on the ipfs node on the block and this is not like a coin or a token right a one bitcoin is pretty much similar to another bitcoin but one image even though if the image is also same that is still pointing to another url on the block right another url on the ipfs this is why this is called non-fungible token because this is every single thing every single url over here would be different from another one i have a lot more to learn myself and a lot more to cover in this whole domain in the web3 space but if you're interested into this you should check out one of the latest courses we have on web3 which is obviously not by me which is summed by some external creator but he dives deep into solidity ethereum nfts as well a bit i think into this newest latest course and we are working on the next course in the web 3 learning path so if you have not subscribed to codename pro this might be just a good time to start working on your web 3 fundamentals on the link below in the description you can find access to that web 3 introduction course where we cover all of this theory i think probably much more in depth in that course but hopefully want to see you over there very soon so that is all for this one i'm gonna see you in the next video very soon if you're still watching this video make sure you comment down in the comment section i watched this video till the end also if you're not part of code dam's discord community you are missing out a lot on events which we organize on a weekly basis to code you already know the drill make sure you like the video subscribe to the channel if you haven't already and thank you so much for watching

Channel: codedamn

Views: 4,654

Keywords: codedamn, what is nft? - non fungible token, nft crypto explained, what is nft, nft art explained, nft crypto, nft explanation, nft coin, nft crypto art, nft cryptocurrency, nft collectibles, crypto nft, ethereum nft, crypto nft tokens, non fungible token, non fungible tokens explained, blockchain, cryptocurrency, cryptocurrency for beginners, non-fungible, fungible, non fungible assets, How Do NFTs Work? NFTs Explained!, non fungible tokens

Id: _HNB7FolOmw

Length: 13min 19sec (799 seconds)

Published: Sat Dec 18 2021