Understanding The Workflow Of NFT Systems

Understanding the Workflow of NFT systems

The world is seeing a wave of the digital world like never before, with the rise of cryptocurrencies and NFTs taking over marketplaces to sell, buy, and invest.

There has been huge hype over the newly popular NFTs. But what do they actually mean and how are they building the internet of the future?

Non-fungible tokens(NFT) are digital assets that can be bought and sold on blockchain technology on specialized platforms just like cryptocurrencies. They are basically objects, but online. They provide us with clear ownership over digital items.

Understanding the Workflow of NFT systems  Understanding the Workflow of NFT systems

Just as with physical items, their value changes based on what people are willing to pay for that particular item. The security feature is unique data added to the digital work. The buyer owns the original and the creator gets reproduction rights, still selling prints. These can also be used to sell anything that is unique and requires proof of ownership. Imagine we made a piece of digital art, essentially a JPG, on our computer and created or minted an NFT out of this. This NFT that represents our art now contains a bit of information about it, such as a unique fingerprint of the file, a token name and a symbol. This gets stored on the blockchain and we become its owner. We can now sell this token by creating a transaction on the blockchain (information never gets tampered with). Only the attributes get stored, not the actual product.

These tokens have been finding their way into everything starting from the art market to the video games. These are non-fungible which makes them a different type of asset.

Understanding the Workflow of NFT systems

 NFTs will open the door for many people with artistic inclinations to explore avenues they never thought were possible. A lot of people will be seen making transitions to a healthy career.

Artists getting royalties from the resale of their digital works will empower creators, leading to a shift in the way art is perceived. They are representing a major shift in culture and modern technology. This will also create opportunities for artists to capitalize on their IP, and everyday people to discover their artistic callings, thus changing the perspective of how art is seen.


The establishment of an NFT requires an underlying distributed ledger for records, together with exchangeable transactions for trading in the peer-to-peer network. This report primarily treats the distributed ledger as a special type of database to store NFT data. In particular, we assume that the ledger has basic security consistency, completeness, and availability characteristics. Based on that, we identify two design patterns for the NFT paradigm.

The first protocol is established from top to bottom: building NFTs from the initiator, and then selling them to the buyer.

Top to Bottom

For this design an NFT protocol consists of another two roles: NFT owner and NFT buyer,

1: NFT Digitize

The file, title, description are being checked to be accurate by the NFT owner. Then they digitize the raw data into a proper format.

2: NFT store

The NFT owner stores the raw data into an external database outside the blockchain. They are also allowed to store the raw data inside a blockchain, despite this operation being gas-consuming.

3: NFT sign

In this the NFT owner signs a transaction, including the hash of NFT data, and then sends the transaction to a smart contract.

4: NFT Mint & Trade

The minting and trading process starts soon after the smart contracts (Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met.) It receives the transaction with the NFT data.

The main mechanism behind NFTs is the logic of the Token Standards.

5: NFT Confirm

The minting process completes as soon the transaction is confirmed. By this approach, NFTs will forever link to a unique blockchain address as their persistence evidence.

Bottom to top

This part of the protocol consists of two roles : NFT creator and NFT buyer.

1: Template create

The project founder initiates a template via the smart contract to set up several basic rules, such as different features (character style, weapons, or accessories) in the game.

2: NFT Randomize

When a buyer bids for an NFT, they can customize the NFT product with a set of additional features on top of basic lines. These additional features are randomly selected from a database that was predefined at the outset.

3: NFT Mint & Trade

Once the corresponding smart contract is triggered it starts the process of minting and trading.

4: NFT Confirm

The procedures are conducted through smart contracts. The generated NFT will be persistently stored on-chain when the consensus procedure has been completed.

Every block here in the blockchain system has a limited capacity. When the capacity in one block becomes full, other transactions will enter a future block linked to the original data block. In the end, all linked blocks have created a long-term history that remains permanent. Whenever an NFT is minted or sold, a new transaction is required to be sent to invoke the smart contract. After the transaction is confirmed, the NFT metadata and ownership details are added to a new block, thereby ensuring that the history of the NFT remains unchanged and the ownership is preserved.

Disclaimer: This blog has opinionated information which does not make us liable for anything.