An NFT is a ‘Non-Fungible Token’. If something has fungibility, it means it is mutually interchangeable or duplicatable, so Non-fungible means that it can’t be exchanged or duplicated for another asset of the same type.
For example, if we use the Bitcoin network, one bitcoin can be exchanged for another bitcoin; they are mutually interchangeable and equal to one another. Whereas, NFTs have unique properties determined by their digital contract (i.e. token ID) and thus given a unique signature and potential value.
NFTs use blockchain technology to store anything digital – this can include:
Here are different types of situations that might trigger someone's wish to buy an NFT.
Gamers: Wish you could sell your in-game skins? Sports fans: Hang up/show off your team’s merch? Sneakerheads: Ever lined up at night to cop a pair? Enthusiasts: Ever bought Pokemon cards?
Where there is interest, there is money.
Ultimately, people find intrinsic value in collecting assets that either resonate with them or provide utility in their life.
So, why buy digital? There are some projects that actually do offer So, why buy digital? There are some projects that actually do offer physical items and/or experiences with the digital token (e.g. VeeFriends). However, the benefit of these digital tokens is the exclusive ownership and the verification of ownership that comes with them. There can also be additional information stored within them that can authenticate its origins and all previous owners.
The contracts (see Advanced - token standards & smart contracts) associated with a token can also allow the original artist or creator to continue to generate royalties from their original work, whenever it is resold. So, there is long-term value associated with creating in this space, compared to the physical world where only the current owner gains any profits from sales.
Not all NFTs are only about art. Many NFTs have underlying utility, this can include:
Blockchain technology provides traceability and ownership.
In short, blockchain (see ‣) is a digital ledger of permanent and auditable (i.e. verifiable) information. A blockchain ledger can include (but is not limited to) the following information:
Thanks to Zoha Aamer & Elizay Jehangir for proofreading it!