Research

Non-Fungible Token (NFT): What It Means and How It Works?

Learn more about an NFT, or non-fungible token, and how it works.
Token Metrics Team
12 minutes
MIN

The most expensive NFT sale to date was Beeple's Everydays: The First 5000 Days, which sold for $69.3 million. This highlights the growing interest in NFTs and the potential for them to be used as a vehicle for sharing virtually any form of media using the blockchain.

But what is an NFT? Let's find out.

What is an NFT?

NFTs, or non-fungible tokens, are unique digital assets with blockchain-managed ownership. They are stored on a blockchain and cannot be replicated or destroyed, making them resistant to tampering. NFTs can represent a wide range of items, including game items, digital art, collectibles, event tickets, and even ownership records for physical assets.

Unlike traditional cryptocurrencies, which are interchangeable and can be easily replicated, NFTs are non-fungible, meaning they have unique qualities that make them one-of-a-kind. This is why NFTs have gained popularity in the art world, where they can be used to verify the authenticity of a digital artwork and ensure that it cannot be copied or stolen.

How Can We Ensure Unique Authenticity?

When someone purchases an NFT, they not only receive the artwork itself, but also a digital receipt that proves that the piece is original, unique, and authentic. This receipt is stored on the blockchain and can be easily accessed and verified by anyone who wants to confirm the ownership and authenticity of the NFT.

While it is technically possible for someone to take a screenshot of an NFT and claim that they own it, this does not give them legal ownership of the artwork. Just like taking a picture of the Mona Lisa at the Louvre does not mean that you own the painting, taking a screenshot of an NFT does not give you ownership of the artwork.

To legally own an NFT, you must purchase it using cryptocurrency and store it in a virtual showcase. This allows you to own and display your artwork in a way that is secure and verifiable, and it ensures that you are the legal owner of the NFT.

NFT Basics You Need To Know

Non-fungible tokens (NFTs) are unique digital files that are stored on a blockchain. A blockchain is a decentralized, public digital ledger that records every transaction that takes place on the decentralized web. This means that the entire history of an NFT, including its creator, properties, transactions, and smart contracts, is backed by a powerful blockchain.

NFTs are different from fungible tokens, such as Bitcoin or Ethereum, which are interchangeable and store value. In contrast, NFTs store data on the blockchain, making them unique and non-replicable.

Important Traits Of NFTs

Some key characteristics of NFTs include:

  • Digital ownership: NFTs are owned and controlled by the individuals who hold them in their digital wallets.
  • Permanent: The data associated with an NFT is permanently stored within the token itself. This can include images, messages, signatures, or any other data.
  • Permission-less: NFTs can be built on a permission-less blockchain, such as Ethereum, meaning that anyone can create and use them.
  • Programmable: Because an NFT is just a piece of code on a blockchain, it can be programmed to have various attributes. For example, an NFT artwork might be programmed to pay the artist royalties on every secondary sale of that artwork.
  • Unique: The uniqueness of an NFT can be verified on the blockchain, ensuring that it is one-of-a-kind and cannot be replicated.

How to Own One? 

To create an NFT, there are several steps that you can follow:

  1. Get your media ready: NFTs support a variety of file types, such as MP3 audio, JPG and PNG images, and 3D files like GLB.
  2. Set up a non-custodial wallet: This will allow you to securely store the cryptocurrency that you will use to buy, sell, and create NFTs. Wallets are also necessary for signing in and creating accounts on NFT marketplaces.
  3. Buy Ethereum or other fungible tokens: You will need to purchase cryptocurrency to cover the cost of minting your NFT.
  4. Connect your wallet to an NFT marketplace: Popular options include Rarible and OpenSea. Connect your wallet by tapping the "Connect" button in the top right corner of the screen. This will create your account and allow you to start creating, minting, and selling your NFTs.
  5. Upload your file and describe your asset: Once you have connected your wallet, you can upload your file to the marketplace and provide a description of your asset. Decide if you want to create a standalone piece or multiple copies of the same NFT.
  6. Mint your NFT: The minting process requires Ethereum for transaction approvals. Once complete, your digital artwork will be ready to be traded and purchased on the marketplace.

Once you have created your NFT, there are several things that you can do with it:

  • Buy and sell it on a marketplace
  • Trade or gift it to others
  • Use it in apps or games
  • Showcase your public NFT inventory on a platform or social media.

The Secondary Markets for NFTs

NFT minting platforms enable creators to create non-fungible tokens (NFTs) to retain more control over their creative output. These NFTs can be sold on the following secondary marketplaces:

  • OpenSea: The first and largest marketplace for NFTs, OpenSea is committed to using open protocols like Ethereum and interoperable standards like ERC-721 and ERC-1155 to enable new digital economies. The platform allows consumers to trade items freely, creators to launch new digital works, and developers to build marketplaces for their digital items. It recently launched the beta version of its Solana-based NFT marketplace.
  • Coinbase NFT: Coinbase recently opened its NFT marketplace to the public in beta. The marketplace acts as a social media platform where users can buy, sell, and interact with NFTs. It aims to make minting, purchasing, showcasing, and discovering NFTs easier.
  • Solanart: Solanart is the first and largest fully-fledged NFT marketplace on Solana. Users can easily access digital collectibles and explore, buy, and sell NFTs that run on the Solana blockchain.
  • Rarible: Rarible is a do-it-yourself NFT marketplace where creators can mint NFTs with ease. The platform's native governance token, "RARI," is used to incentivize users and give the community a voice. However, unrestricted access means that Rarible has become a place for people to mint counterfeit versions of existing NFTs.
  • Nifty Gateway: Owned by the Gemini crypto exchange, Nifty Gateway is a popular NFT marketplace that focuses on user-friendly and viral drops by celebrated artists.
  • SuperRare: SuperRare (SR) is one of Ethereum's first crypto-art NFT marketplaces. Only accepted artists can participate in the platform, where users can discover, buy, and sell tokenized digital art and showcase their collections.

The demand for secondary NFT sales is growing rapidly, leading to increased competition among these marketplaces. Like the early days of Web 1 and 2.0, the emergence of Web 3.0 has created an open market where these platforms must find ways to attract and retain customers.

Some Notable NFT Projects

The thriving NFT market has led to the launch of several high-value projects, including the following companies:

  • Yuga Labs: a blockchain technology company that develops Ethereum-based NFTs and digital collectibles. Yuga's first project, Bored Ape Yacht Club, is one of the most valuable NFT collectibles in the space. The company has also rewarded its holders with free NFTs and other perks. Yuga Labs recently acquired Larva Labs, which brings high-value projects like Cryptopunks and Meebits under the Yuga brand. The company is backed by investors like Coinbase, Samsung, and Mark Cuban.
  • Doodles: a collection of 10,000 Ethereum-based NFTs featuring unique visual traits designed by BurntToast. The Doodles collection includes rare heads, costumes, and colorways, and the universe is ever-expanding. Owners of Doodles have exclusive access to new products, merchandise, and events.
  • Okay Bears: a collection of 10,000 Solana-based NFTs. Ownership of an Okay Bear grants access to a virtuous community that will extend beyond the internet into the real world.

The Future of NFTs

Blockchain technology is known for its ability to represent assets and prove ownership. NFTs take this a step further by enabling people to potentially purchase non-fungible assets like land and gold. The global market cap for gold and real estate is over $300 trillion, so even a small percentage of that being tokenized would greatly increase the total crypto market cap. Tokenized real estate offers ordinary people the opportunity to invest in real estate, which has traditionally been difficult for the average person to participate in.

NFTs also have applications in other industries. For example, Nike recently filed a patent for NFT-enabled sneakers called "CryptoKicks." In 2019, Louis Vuitton announced plans to use NFTs to track the ownership of luxury fashion items. NFTs can also be used to tokenize certifications, degrees, and licenses, as well as sensitive data like medical records. The potential for NFTs to show ownership of any non-fungible commodity, whether real or virtual, is vast.

In conclusion, the use of non-fungible tokens (NFTs) has expanded beyond digital art and collectibles to include a wide range of real and virtual assets. The ability of NFTs to represent and prove ownership offers exciting possibilities for industries such as real estate, fashion, and even healthcare. As the technology and market continue to evolve, the potential applications for NFTs are endless.

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Token Metrics Team
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RESTful API Essentials: Design, Security, and Best Practices

Token Metrics Team
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APIs are the connective tissue of modern applications; among them, RESTful APIs remain a dominant style because they map cleanly to HTTP semantics and scale well across distributed systems. This article breaks down what a RESTful API is, pragmatic design patterns, security controls, and practical monitoring and testing workflows. If you build or consume APIs, understanding these fundamentals reduces integration friction and improves reliability.

What is a RESTful API?

A RESTful API (Representational State Transfer) is an architectural style for designing networked applications. At its core, REST leverages standard HTTP verbs (GET, POST, PUT, PATCH, DELETE) and status codes to perform operations on uniquely identified resources, typically represented as URLs. Key characteristics include:

  • Statelessness: Each request contains all information the server needs to fulfill it, enabling horizontal scaling.
  • Resource orientation: APIs expose resources (users, orders, blocks, etc.) rather than remote procedure calls.
  • Uniform interface: A consistent set of conventions for requests and responses, improving discoverability and client simplicity.

REST is a pragmatic guideline rather than a strict protocol; many APIs labeled "RESTful" adopt REST principles while introducing pragmatic extensions (e.g., custom headers, versioning strategies).

Design Principles & Resource Modeling

Good REST design begins with clear resource modeling. Ask: what are the nouns in the domain, and how do they relate? Use predictable URL structures and rely on HTTP semantics:

  • /resources - list or create a resource (GET to list, POST to create)
  • /resources/{id} - operate on a single resource (GET, PUT/PATCH, DELETE)
  • /resources/{id}/subresources - nested relationships when needed

Design tips to improve usability and longevity:

  1. Use consistent naming: plural nouns, lowercase, and hyphenation for readability.
  2. Support versioning: include a version in the URL or headers to avoid breaking clients (e.g., /v1/...).
  3. Leverage hypermedia judiciously: HATEOAS can improve discoverability but adds complexity; choose when it benefits clients.
  4. Pagination, filtering, sorting: standardize query parameters for large collections to avoid performance pitfalls.
  5. Use appropriate status codes: communicate success, client errors, and server errors clearly (200, 201, 400, 401, 403, 404, 429, 500, etc.).

Security, Authentication, and Rate Limiting

Security is a primary concern for any public-facing API. Typical controls and patterns include:

  • Authentication: OAuth 2.0 (Bearer tokens) and API keys are common. Choose a mechanism that fits your risk model and client types. Avoid transporting credentials in URLs.
  • Authorization: Implement least-privilege checks server-side to ensure tokens only permit intended actions.
  • Encryption: Always use TLS (HTTPS) to protect data in transit; consider TLS 1.2+ and strict ciphers.
  • Rate limiting and throttling: Protect backends from abuse with per-key or per-IP limits and provide informative 429 responses with Retry-After headers.
  • Input validation and sanitization: Validate request bodies and query parameters to reduce injection and parsing vulnerabilities.
  • Audit and logging: Log authentication events, rate-limit triggers, and error patterns while respecting privacy and compliance requirements.

Designing for security also means operational readiness: automated certificate rotation, secrets management, and periodic security reviews reduce long-term risk.

Performance, Monitoring, and AI-Assisted Tooling

Performance tuning for RESTful APIs covers latency, throughput, and reliability. Practical strategies include caching (HTTP Cache-Control, ETags), connection pooling, and database query optimization. Use observability tools to collect metrics (error rates, latency percentiles), distributed traces, and structured logs for rapid diagnosis.

AI-assisted tools can accelerate many aspects of API development and operations: anomaly detection in request patterns, automated schema inference from traffic, and intelligent suggestions for endpoint design or documentation. While these tools improve efficiency, validate automated changes through testing and staged rollouts.

When selecting tooling, evaluate clarity of integrations, support for your API architecture, and the ability to export raw telemetry for custom analysis.

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What distinguishes RESTful APIs from other API styles?

REST focuses on resources and uses HTTP semantics; GraphQL centralizes queries into a single endpoint with flexible queries, and gRPC emphasizes high-performance RPCs with binary protocols. Choose based on client needs, performance constraints, and schema evolution requirements.

How should I version a RESTful API without breaking clients?

Common approaches include URL versioning (e.g., /v1/), header-based versioning, or semantic versioning of the API contract. Regardless of method, document deprecation timelines and provide migration guides and compatibility layers where possible.

What are practical testing strategies for RESTful APIs?

Combine unit tests for business logic with integration tests that exercise endpoints and mocks for external dependencies. Use contract tests to ensure backward compatibility and end-to-end tests in staging environments. Automate tests in CI/CD to catch regressions early.

How do I design for backward compatibility?

Additive changes (new fields, endpoints) are generally safe; avoid removing fields, changing response formats, or repurposing status codes. Feature flags and content negotiation can help introduce changes progressively.

What should be included in API documentation?

Provide clear endpoint descriptions, request/response examples, authentication steps, error codes, rate limits, and code samples in multiple languages. Machine-readable specs (OpenAPI/Swagger) enable client generation and testing automation.

Disclaimer: This content is educational and informational only. It does not constitute professional, legal, security, or investment advice. Test and validate any architectural, security, or operational changes in environments that match your production constraints before rollout.

Research

Practical Guide to Claude API Integration

Token Metrics Team
4
MIN

The Claude API is increasingly used to build context-aware AI assistants, document summarizers, and conversational workflows. This guide breaks down what the API offers, integration patterns, capability trade-offs, and practical safeguards to consider when embedding Claude models into production systems.

Overview: What the Claude API Provides

The Claude API exposes access to Anthropic’s Claude family of large language models. At a high level, it lets developers send prompts and structured instructions and receive text outputs, completions, or assistant-style responses. Key delivery modes typically include synchronous completions, streaming tokens for low-latency interfaces, and tools for handling multi-turn context. Understanding input/output semantics and token accounting is essential before integrating Claude into downstream applications.

Capabilities & Feature Surface

Claude models are designed for safety-focused conversational AI and often emphasize instruction following and helpfulness while applying content filters. Typical features to assess:

  • Instruction clarity: Claude responds robustly to explicit, structured instructions and system-level guidelines embedded in prompts.
  • Context handling: Larger context windows enable multi-turn memory and long-document summarization; analyze limits for your use case.
  • Streaming vs batch: Streaming reduces perceived latency in chat apps. Batch completions suit offline generation and analytics tasks.
  • Safety layers: Built-in moderation and safety heuristics can reduce harmful outputs but should not replace application-level checks.

Integration Patterns & Best Practices

Designing a robust integration with the Claude API means balancing performance, cost, and safety. Practical guidance:

  1. Prompt engineering: Build modular prompts: system instructions, user content, and optional retrieval results. Keep system prompts explicit and version-controlled.
  2. Context management: Implement truncation or document retrieval to stay within context limits. Use semantic search to surface the most relevant chunks before calling Claude.
  3. Latency strategies: Use streaming for interactive UI and batch for background processing. Cache frequent completions when possible to reduce API calls.
  4. Safety & validation: Post-process outputs with rule-based checks, content filters, or secondary moderation models to catch hallucinations or policy violations.
  5. Monitoring: Track token usage, latency percentiles, and error rates. Instrument prompts to correlate model changes with downstream metrics.

Primary Use Cases and Risk Considerations

Claude API use cases span chat assistants, summarization, prompt-driven code generation, and domain-specific Q&A. For each area evaluate these risk vectors:

  • Hallucination risk: Models may fabricate facts; rely on provenance and retrieval augmentation when answers require accuracy.
  • Privacy: Avoid sending sensitive personal data unless contract and data processing terms explicitly permit it.
  • Regulatory exposure: For regulated domains (health, legal, finance) include human oversight and compliance review rather than treating outputs as authoritative.
  • Operational cost: Longer contexts and high throughput increase token costs; profile realistic workloads before scaling.

Tools, Libraries, and Ecosystem Fit

Tooling around Claude often mirrors other LLM APIs: HTTP/SDK clients, streaming libraries, and orchestration frameworks. Combine the Claude API with retrieval-augmented generation (RAG) systems, vector stores for semantic search, and lightweight caching layers. AI-driven research platforms such as Token Metrics can complement model outputs by providing analytics and signal overlays when integrating market or on-chain data into prompts.

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FAQ — What is the Claude API?

The Claude API is an interface for sending prompts and receiving text-based model outputs from the Claude family. It supports completions, streaming responses, and multi-turn conversations, depending on the provider’s endpoints.

FAQ — How do I manage long documents and context?

Implement a retrieval-augmented generation (RAG) approach: index documents into a vector store, use semantic search to fetch relevant segments, and summarize or stitch results before sending a concise prompt to Claude. Also consider chunking and progressive summarization when documents exceed context limits.

FAQ — How can I control API costs?

Optimize prompts to be concise, cache common responses, batch non-interactive requests, and choose lower-capacity model variants for non-critical tasks. Monitor token usage and set alerts for unexpected spikes.

FAQ — What safety measures are recommended?

Combine Claude’s built-in safety mechanisms with application-level filters, content validation, and human review workflows. Avoid sending regulated or sensitive data without proper agreements and minimize reliance on unverified outputs.

FAQ — When should I use streaming vs batch responses?

Use streaming for interactive chat interfaces where perceived latency matters. Batch completions are suitable for offline processing, analytics, and situations where full output is required before downstream steps.

Disclaimer

This article is for educational purposes only and does not constitute professional, legal, or financial advice. It explains technical capabilities and integration considerations for the Claude API without endorsing specific implementations. Review service terms, privacy policies, and applicable regulations before deploying AI systems in production.

Research

API Keys Explained: Secure Access for Developers

Token Metrics Team
5
MIN

Every modern integration — from a simple weather widget to a crypto analytics agent — relies on API credentials to authenticate requests. An api key is one of the simplest and most widely used credentials, but simplicity invites misuse. This article explains what an api key is, how it functions, practical security patterns, and how developers can manage keys safely in production.

What an API Key Is and How It Works

An api key is a short token issued by a service to identify and authenticate an application or user making an HTTP request. Unlike full user credentials, api keys are typically static strings passed as headers, query parameters, or request bodies. On the server side, the receiving API validates the key against its database, checks permissions and rate limits, and then either serves the request or rejects it.

Technically, api keys are a form of bearer token: possession of the key is sufficient to access associated resources. Because they do not necessarily carry user-level context or scopes by default, many providers layer additional access-control mechanisms (scopes, IP allowlists, or linked user tokens) to reduce risk.

Common API Key Use Cases and Limitations

API keys are popular because they are easy to generate and integrate: you create a key in a dashboard and paste it into your application. Typical use cases include server-to-server integrations, analytics pulls, and third-party widgets. In crypto and AI applications, keys often control access to market data, trading endpoints, or model inference APIs.

Limitations: api keys alone lack strong cryptographic proof of origin (compared with signed requests), are vulnerable if embedded in client-side code, and can be compromised if not rotated. For higher-security scenarios, consider combining keys with stronger authentication approaches like OAuth 2.0, mutual TLS, or request signing.

Practical Security Best Practices for API Keys

Secure handling of api keys reduces the chance of leak and abuse. Key best practices include:

  • Least privilege: Create keys with the minimum permissions required. Use separate keys for read-only and write actions.
  • Rotate regularly: Implement scheduled rotation and automated replacement to limit exposure from undetected leaks.
  • Use environment variables and secrets managers: Never commit keys to source control. Use environment variables, vaults, or cloud KMS services to store secrets.
  • Restrict usage: Apply IP allowlists, referrer checks, or VPC restrictions where supported to limit where the key can be used.
  • Audit and monitor: Log usage, set alerts for anomalous patterns, and review dashboards for spikes or unexpected endpoints.
  • Expire and revoke: Use short-lived keys where possible; immediately revoke compromised keys and revoke unused ones.

These patterns are practical to implement: for example, many platforms offer scoped keys and rotation APIs so you can automate revocation and issuance without manual intervention.

Managing API Keys in Crypto and AI Workflows

Crypto data feeds, trading APIs, and model inference endpoints commonly require api keys. In these contexts, the attack surface often includes automated agents, cloud functions, and browser-based dashboards. Treat any key embedded in an agent as potentially discoverable and design controls accordingly.

Operational tips for crypto and AI projects:

  • Use separate keys per service and environment (dev, staging, production).
  • Scale permission granularity: allow market-data reads without trading execution permissions.
  • Encrypt keys at rest and limit human access to production secrets.
  • Integrate rate-limit and quota checks to avoid service disruption and to detect misuse quickly.

Platforms such as Token Metrics provide APIs tailored to crypto research and can be configured with scoped keys for safe consumption in analytics pipelines and AI agents.

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FAQ: What Is an API Key?

An api key is a token that applications send with requests to identify and authenticate themselves to a service. It is often used for simple authentication, usage tracking, and applying access controls such as rate limits.

FAQ: How should I store api keys?

Store api keys outside of code: use environment variables, container secrets, or a managed secrets store. Ensure access to those stores is role-restricted and audited. Never commit keys to public repositories or client-side bundles.

FAQ: What's the difference between an api key and an OAuth token?

API keys are static identifiers primarily for application-level authentication. OAuth tokens represent delegated user authorization and often include scopes and expiration. OAuth is generally more suitable for user-centric access control, while api keys are common for machine-to-machine interactions.

FAQ: How often should I rotate api keys?

Rotation frequency depends on risk tolerance and exposure: a common pattern is scheduled rotation every 30–90 days, with immediate rotation upon suspected compromise. Automate the rotation process to avoid service interruptions.

FAQ: What are signs an api key is compromised?

Watch for abnormal usage patterns: sudden spikes in requests, calls from unexpected IPs or geographic regions, attempts to access endpoints outside expected scopes, or errors tied to rate-limit triggers. Configure alerts for such anomalies.

FAQ: Can I restrict an api key to a single IP or domain?

Many providers allow IP allowlisting or referrer restrictions. This reduces the attack surface by ensuring keys only work from known servers or client domains. Use this in combination with short lifetimes and least-privilege scopes.

FAQ: How do api keys fit into automated AI agents?

AI agents that call external services should use securely stored keys injected at runtime. Limit their permissions to only what the agent requires, rotate keys regularly, and monitor agent activity to detect unexpected behavior.

Disclaimer

This article is educational and informational in nature. It is not investment, legal, or security advice. Evaluate any security approach against your project requirements and consult qualified professionals for sensitive implementations.

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