If you’ve been paying attention to finance talks in recent years, you’d have heard the words ‘cryptocurrency’ and ‘blockchain’ a good number of times. And if you’re like many people, you would have ended up being confused by the highly technical terms.
In the past couple of years, cryptocurrencies existing on digital blockchains have become more than just a viral comic trend led by a few. Today, the cryptocurrency market is highly valued and is receiving new attention because of the sustainable technology it operates on.
More recently, new technologies such as NFTs have come about and are gaining traction again. For most people who were still barely trying to understand what exactly a blockchain really is, NFTs were even more impossible to understand.
This is why we have renowned investor, marketer, and NFT expert, Jurgen Cautreels to explain what exactly NFTs are. And here, he is going to take it right from the basics.
What is an NFT?
NFT is an acronym for the phrase non-fungible token. Yes, I know it still sounds complex. To understand the concept, we’d examine the words ‘non-fungible’ and ‘token’.
A token is a record in a blockchain, while non-fungible means that this particular token is unique. It is identifiable and is not necessarily equal in quality to other tokens on the same blockchain.
On the other hand, there are fungible tokens of which Bitcoin and Ether are examples. These tokens are fungible because every token is actually the same, and the blockchain is only concerned with quantity and not the identity of each token.
What makes NFTs special?
Now, we know that a non-fungible token is identifiable and that makes it distinct from fungible tokens. But there’s more.
An NFT is not merely identifiable from others, what makes non-fungible tokens special is their ability to convey creative expressions in the tokens. And the ability to hold some data is what gives the token its worth.
The data is usually some digital expression of art or creativity, and ownership of the token can be transferred from the seller to the buyer when an agreement is reached.
What are NFTs used for?
On social media, there has been a rave of art stored in NFTs being sold for really high prices. Many people, possibly including you, were even more shocked to learn that the art that was purchased could still be reproduced and transferred digitally.
Buying an NFT only gives the buyer sole ownership of that token on the blockchain. While people may screenshot it or reprint it physically, the owner has sole ownership of that particular non-fungible token.
Also, NFTs are being used to build the world of decentralized finance. For instance, games now make use of non-fungible tokens for players to purchase virtual land or characters. In these games, players can exchange game value items in private interactions between themselves. This can only be done because the NFTs allow the players to actually own the in-game items they buy.
Non-fungible tokens would really change a lot in the way humans interact on the web, and this means that this is just the beginning. Along with other experts, I really think that NFTs are the future.