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What Are Non-Fungible Tokens (NFTs)?

nfts explained

In this article, we will explain what Non-Fungible Tokens (NFTs) are and what their use is. We’ll also take a quick look at a few examples.

 

What Do “Fungible” and “Non-Fungible” Mean?

Fungibility is the ability of a good or asset to be interchanged with another individual asset of the same type, quality, or quantity.

In other words, fungible goods are not unique, which is also the case of a banknote or a serial product.

On the other hand, a non-fungible good is something unique.

Let’s take Leonardo Da Vinci’s Mona Lisa for example. No matter how many copies and posters are made based on it, the original painting is one, and, therefore, nothing else could replace it.

 

What Is an NFT?

An NFT is a digital asset that represents a unique real-world object, such as art, music, and videos, on a blockchain. 

It can be bought and sold online, with cryptocurrencies, and will be traded in the same way on Blockchain.

NFTs are also generally unique or at least part of limited series and collections with unique identifying codes.

This contrasts sharply with most digital creations, which are almost always infinite in supply and can be replicated endlessly.

 

What’s the Difference Between an NFT and a Cryptocurrency?

Just like fiat money, cryptocurrencies are fungible, so they can be exchanged – one Bitcoin is always equal to another Bitcoin.

Although it benefits from the same programming technology as cryptocurrencies, an NFT is different. That’s because it has a digital signature that makes it impossible for it to be exchanged for another NFT.

When an investor buys an NFT, they actually receive a certificate of originality.

 

What NFTs Are There?

An NFT can be created or “minted” as a representation of both tangible or intangible objects, such as:

  • Art
  • GIFs
  • Videos
  • Avatars and video game skins
  • Music
  • Designer products

Tweets are also among them, although less common – as is the case with Twitter co-founder Jack Dorsey’s first tweet, which sold for $2.9 million.

 

Platforms on Which You Can Sell NFTs

The most common marketplaces are:

  1. OpenSea
  2. Rarible
  3. SuperRare
  4. Foundation
  5. AtomicMarket

Conclusion

Essentially, NFTs are the digital equivalent of collectibles and can have only one owner at a time.

Creators can include their signatures in their associated metadata to certify their originality.

Thanks to Blockchains, they no longer have to rely on galleries or auction houses to sell their art. Instead, the artist can subsequently receive a percentage of the profit if their NFT is resold.

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