What is an NFT?

Many incredible resources did thorough research on what an NFT is. Still however, I figured you couldn’t start a blog without writing a post about the topic itself. So here it is: What is an NFT?

NFT stands for “Non-Fungible Token”.

Fungibility & Non-Fungibility

Let us dig a bit deeper into this word. “Fungible” or “Fungbility” is the property of a good or a commodity whose individual units are interchangeable and each part is exactly the same as another part. Meaning two things have exactly the same characteristics.

For example, money is fungible. I can exchange every 10€ note with any other and nothing really would change. While they are two different pieces of fancy paper, both bills represent the exact same value.

“Non-Fungible” in return is something of distinct value. There are no two exactly the same.

Example: a house or a car

Non-Fungible Token (NFT)

A token is an aid/means of identifiying and authenticating a user within a computer network. Token in the general sense can be made of hardware or software. The blockchain allows us to create and distribute tokens using software. Maybe you have heard of one called bitcoin.

Bitcoin is a good example of a fungible token. One bitcoin is one bitcoin is one bitcoin.

A non-fungible token allows us to create a digital certificate that represents a unique asset (remember not one is like another so they are not directly interchangeable). We can attach this unique asset to anything, from digital to non-digital assets, from IRL (=in real life) property to jpegs, audiofiles or even this blog article.

NFT Examples for digital assets might be GIFs, Collectibles, Music, Videos.

NFT Examples for non-digital assets are deeds to a car, tickets to a real world event, legal documents, and signatures

NFTs allow us to create proof of authenticity for digital content that can be owned, bought, sold and traded. Because these tokens are stored on an open and distributed blockchain (such as Ethereum, Solana or Polygon), their metadata and transaction history are completely verifiable by anyone in the world with an internet connection. All participants know what digital wallets own what tokens at any given point in time.

Are NFTs the future?

The implications of NFTs are truly infinite and we have just began to scratch the surface of possibilities. So far, NFTs are being used in industries around digital art, collectibles, gaming skins and digital land.

There will be additional articles focusing on different NFT use-cases in the future.

I hope you learned something today and would love you to consider following me on my twitter @0xCryptonite if you like more recent updates about the space.

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