Introduction to Non-Fungible Tokens (NFT)
Non-fungible tokens are distinguished units of assets on a cryptographic chain, commonly on a public ledger called blockchain. These tokens cannot be exchanged or traded like cryptocurrencies can be, since every token is different from each other unlike cryptocurrencies (a fungible token), which are identical to each other.
Understanding Non-Fungible Tokens (NFT)
Fungible tokens are the ones that can be exchanged as money, solely because the value of one unit or combination can be equalized to another. NFTs though, are unique from each other, and made to be so. They thus take to represent many real world objects digitally to reduce the prospect of fraud and plagiarism. It’s in the nature of a programmable NFT that it is traceable and programmable using metadata, i.e. the information required to make the NFT. NFTs can be owned when the owner writes their identity into the asset’s metadata. Example being an artist signing their own artwork in the metadata for easier identification, that makes it more traceable to the owner too. NFTs work on the Ethereum blockchain, that is host to innumerable other NFTs. They are made to represent audio-visual and readable media in the real world, that can be bought or sold authentically. It helps preserve the originality of the creator’s work while also enabling trade and profit for them. Where other forms of files like mp3s and JPEGs are replicable, NFTs are not.
Highlights of Non-Fungible Tokens (NFT)
- NFTs cannot be replicated; each one is unique to itself due to the metadata they contain. As such, they can be equalled against another asset and therefore are not transferable in an exchange like cryptocurrency is.
- NFTs can be purchased or sold for an amount of cryptocurrency. For example, an NFT for an artwork can be bought on a special market for a price of a few Bitcoins or some Ether or other currencies.
- When you purchase an NFT, you are essentially receiving a digital but true copy of a creation with exclusive ownership rights.
