A non-fungible token (NFT) is a unit of data on a digital ledger called a blockchain, where each NFT can represent a unique digital item, and thus they are not interchangeable. When I read news about the famous Nyan Cat that sold as a one-of-a-kind piece of crypto art, it makes me to thinking, ” So what’s going on here & What is NFT?”
First, let’s see what is Cryptocurrency?
A cryptocurrency is a new form of digital money. You can transfer your traditional, non-crypto currency money like the U.S. dollar digitally, but that’s not quite the same as how cryptocurrencies work. When cryptocurrencies become mainstream, you may be able to use them to pay for stuff electronically, just like you do with traditional currencies.
So, what does non-fungible token or NFT mean?
Non-fungible more or less means that it’s unique and can’t be replaced with something else. for example, your house is non-fungible. if you trade it for another house, you get something completely different from what you have. On the other hand, a bitcoin is fungible — trade one for another bitcoin, and you’ll have the same thing. A simple NFT meaning is that it is a token, or unit of currency, that is non-fungible, or unique, as it cannot be exchanged for something else. NFTs can represent digital or physical assets.
How do NFTs work?
most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently. they can really be anything digital (such as drawings or music), but a lot of the current excitement is around using the tech to
sell digital art.
I can click-right and download a million-dollar artwork! what is up with that?!
That’s right! You can. But NFTs are designed to give you something that can’t be copied: ownership of the work (though the artist can still retain the copyright and reproduction rights, just like with physical artwork) To put it in terms of physical art collecting: anyone can buy Nyan Cat. But only one person can own the original.
What does the future hold for NFTs?
For NFTs the true potential is yet to be uncovered. Whether big industry players in art, design, or fashion will buy into it or not is also yet to be seen. One thing is for sure, NFTs did open the door for many digital artists to be identified and valued, and the smart contract functionalities of the blockchain technology will be used in future evaluations.