If you haven’t heard the buzz term NFT yet or you’ve heard it but don’t know what it means, trust me, you’re not alone. NFT stands for a non-fungible token, and I’m here to give you a quick overview of what that is and why it’s become such a hot topic.
Fungible and Non-Fungible asset
Let’s first talk about the difference between fungible and non-fungible. A fungible asset is interchangeable with another identical item or asset. Physical currencies and financial securities are generally considered fungible. For instance, you can exchange one quarter for another or a share of stock with another of the same company. Non-fungible assets, on the other hand, such as NFTs, have unique qualities and are not considered interchangeable. For example, artwork and homes are generally considered non-fungible.
What are NFT and things about it you should know
Let’s dig into the definition. At the most basic level, an NFT is an ownership code or token that corresponds to a specific digital asset. The asset can be an image, soundbite, or any other digital media. Merriam-Webster Webster announced that they are selling their definition of NFTs as, you guessed it, an NFT. Much like art, NFTs are widely regarded as speculative investments that can gain or lose unspeakable value over time. Once an NFT is owned, it can be bought and sold or even auctioned. So it can maybe gain or lose value over time. NFTs can be used across many digital media and assets, including tweets, digital trading cards, think baseball cards, GIFs, memes, and even dictionary definitions.
You will often hear NFTs talked about in the same breath as cryptocurrency. This is for three reasons. They both use blockchain technology and can live in a virtual wallet. They both represent a departure from the existing standard. Crypto is a digital currency. NFTs are digital assets. They are digital assets that can be treated as speculative investments. Using blockchain technology means that NFTs offer a secure transaction record and allow for proof of ownership that is verifiable through the blockchain. This is a game-changer in the world of digital art and media since original creations are so easily replicated and shared online, think viral videos and GIFs.
NFT technology allows these assets to have one or more unique identifiers and control the distribution of proprietary work, but don’t confuse an NFT with the asset itself. The token has much more to do with ownership of the transaction than it does with the digital asset itself. Like with art, NFTs are a way to support artists and creators, but NFTs are also redefining how they are shared because the asset could potentially continue to be replicated and shared online, like in the same way that memes, tweets, screenshots, videos, and music are widely shared regularly, but the owner would still be proprietary, allowing it to potentially gain value and have one or more bonafide owners.
From a digital asset perspective
NFTs have created the ability to verify the authenticity and connect creators directly to consumers and collectors in an unprecedented way, especially because digital assets can be shared and viewed simultaneously across the world, unlike a physical asset that can only exist in its original form in one place at a time. NFTs allow ownership to be rare and proprietary despite mass replication and distribution.
Thanks for reading everyone, and I hope you’ve learned something about NFTs and how they have the potential to continue to shape the digital and physical world.
