An NFT is a cryptographic token that represents something unique and has an individual characteristic that sets it apart. Owning an NFT is like owning a one-of-a-kind work of art or a collectible. antique There’s nothing like an explosion of blockchain news to leave you thinking, “Um… what’s going on here?” That’s the feeling I’ve experienced while reading about Grimes getting millions of dollars for NFTs or about Nyan Cat being sold as one.
You might be wondering: what is an NFT, and what does it stand for?
That doesn’t make it any clearer.
Right, sorry. “Non-fungible” more or less means that it’s unique and can’t be replaced with something else. For example, a bitcoin is fungible — trade one for another bitcoin, and you’ll have exactly the same thing. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you’d have something completely different. You gave up a Squirtle, and got a 1909 T206 Honus Wagner, which StadiumTalk calls “the Mona Lisa of baseball cards.” (I’ll take their word for it.)
How do NFTs work?
At a very high level, 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 from, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs. (Some already have.)
What’s worth picking up at the NFT supermarket?
NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art.
Musician Grimes recently sold her crypto art through non-fungible tokens or NFTs for $5.8 million, while Chris Torres, creator of Nyan Cat, a famous internet meme, sold a one-of-a-kind version of his viral GIF for 300 ethereum or around $600,000. Artist Mike Winkelmann, also known as Beeple, sold one of his works for $6.6 million.
The NFT space recently exploded with many musicians and digital artists exploring the route to sell their creations in the form of collectibles or art. We tell you what non-fungible tokens are and how they work. NFTs are unique tokens or digital assets that generate value because of their uniqueness. For example, if two individuals hold a bitcoin each, they can exchange their bitcoins, which are replica of each other and have the same value. However, NFTs are not interchangeable, as they are more like pieces of art where each and every token is unique in itself. While bitcoins are also digital assets, NFTs are unique digital assets with each token representing a unique value.
On the blockchain, when you send a bitcoin to someone, a ledger entry gets made. In the case of NFT also, a ledger entry is also made, but in that entry, there is also an address to the file, which establishes the ownership of that NFT.
“When someone transfers one NFT to someone else, the code, which represents the NFT, also gets transferred to the other person on the blockchain. This makes sure that one can check on the blockchain who owns the NFT. When an NFT is created it is put up on the blockchain and is time-stamped, therefore it makes digital ownership very simple and easy to identify,” said Nischal Shetty, chief executive officer of WazirX.
What are the different uses of NFTs?
Right now, the crypto industry is still trying to figure out what’s going to be the best use case for NFTs. The applications start from as trivial as unique images representing each NFT.
For example, in the real world, all of us can have printouts and copies of the iconic painting Mona Lisa, while there is only one real portrait. Similarly, in the digital verse, there can be many copies of art, but the ownership lies with the person who owns that token, and this is the aspect, which caught everyone’s attention recently.
Another application of NFTs could be online to offline integration. “Today when you buy pieces of offline art, you have either custody it or keep it somewhere, that’s how the ownership is decided. But tomorrow, they can also be tokenized where a digital form of that art exists and whoever owns that token, owns the real art,” said Shetty. Moreover, digital collectibles of games played by the teams of the US-based National Basketball Association have garnered more than $200 million in sales so far.
To learn more please visit: What NFTs Are and How They Work