First things first, NFTs are non-fungible tokens. These days, this is a term that is best associated with blockchain technology. Coming to the blockchain, this is one find in recent times that has completely revolutionized any ledger technology that is out there in the market. The very mention of any content concerning blockchain technology results in heads turning and there is always something new to learn about it. Today, we are going to discuss NFTs concisely.
Getting a notch deeper
In very simple words, non-fungible means that which is unique and distinctive from others. So, you cannot really ‘exchange’ a non-fungible item with another because they are like a one-off dealing card. On the contrary, fiat currencies for example are fungible. This means, you can trade one USD for another and you would have to yourself the same thing.
The technicality
Non-fungible tokens are cryptographic values existing on a blockchain network. These assets have unrepeated and special identities and unique metadata which differentiates one from another token. Since all of these tokens have unequal values (in terms of codes and metadata), they cannot be commercially traded.
We already know that NFTs exist on blockchain networks. On a larger picture, most non-fungible tokens belong to the Ethereum blockchain. This network is responsible for the functioning of Ether coins commonly known as ETH coins – a cryptocurrency that generally comes right after Bitcoin, in terms of popularity. But the Ether blockchain is also equipped to support NFTs and can reserve additional information which makes them different from ETH coins.
The ETH blockchain does not run a monopoly when it comes to NFTs. There exist other blockchain networks as well that have their sort of NFTs.
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What are some of the examples of NFTs?
Almost any digital item on earth can fall under the category of non-fungible tokens or can qualify as one. Not sure about this one yet?
Very recently, Twitter founder cum CEO Jack Dorsey was able to transform his first-ever tweet into a signature NFT and he sold it for a whopping $2.9 million. So basically, any artwork, music, digital collectibles, or even actual assets like real estate can be turned into NFTs and sold digitally. However, the ongoing hype about NFTs is majorly for digital art. Let’s put more light on this context, as you may be already wondering that in today’s digital world, everyone has access to everything. So what makes NFTs special?
You can just download a thing from the internet using a single click of a button. This can also include items that belong to an NFT. But the difference lies in the fact that you might have a print or a copy of it, but the person buying it as an NFT owns the actual and original artwork.
A couple of more important takeaways
- Since the Ether blockchain has the most number of NFTs, many of these tokens can only be bought through ETH coins.
- To lay your hands on an NFT, saving some ETH coins is the primary step. You can then use those coins and buy NFTs from online NFT supported marketplaces.
- NFTs lie on the same skeleton that cryptocurrencies use. Hence, when it comes to safety, NFTs perform fairly well. However, certain risk factors still exist like hacking and cyber-crime.
- One of the main risks of NFTs is, if the blockchain network managing the NFT crashes all of a sudden, there is a possibility that your tokens will become irretrievable.
Conclusion
NFTs have opened several digital trading opportunities and are yet another important discovery for the world of blockchain technology.
