There is always so much happening in the world of blockchain and cryptocurrency, that it’s difficult to keep up. It’s rightly said that a year in the crypto world seems like 10 years in the normal one. Every year, so much innovation happens that it’s absolutely incredible. This year, one such innovation that is taking the world by storm is an NFT.
You might have heard about NFTs and how they are selling for unimaginable prices. You might have also heard that they are being used for artwork. But what exactly is an NFT, and how do you buy or sell one? Well, let’s take a more detailed look.
What Is NFT?
NFT stands for non-fungible token. To understand this, you must first understand what fungible means. Fungibility is an essential feature of money (or the paper currency we use). This means that each unit of currency can easily be replaced by another as they are all the same. This means that your $10 bill can be replaced with another $10 bill as they are the same.
Non-fungible tokens, on the other hand, are unique. It means that each particular token is a unique creation and can’t be replaced by something else. In the real world, collectibles such as trading cards or antiques are considered non-fungible. In fact, they have such high values because of the very fact that they are unique.
An NFT is an attempt to bring this uniqueness from the real world to the blockchain and crypto world. You could say that each NFT is a representation of something unique that can be bought and sold on blockchains. Right now, most NFTs are created using the Ethereum blockchain. But many are also using other blockchains to create them.
Since these NFTs are created using blockchain technology, their authenticity and validity are always taken care of. The trail of ownership, too, is also perfectly and immutably recorded. This further increases the value of an NFT.
Can Anything Be An NFT?
Also, it’s not only artwork that can be represented as NFTs. People have made NFTs out of their tweets, memes, photos, music, and many other things. Basically, if something you have is unique and if others may consider it valuable, you could make an NFT out of it.
Since they are still new, you could say that we are currently in the experimentation phase of NFTs. In the future, we can imagine that they will be as mainstream as buying artwork is today. You would be able to browse virtually infinite NFTs of different types and pay for something if you want. There will probably be huge marketplaces catering to different types of NFTs.
In essence, we are headed to a more digital world. Even our valuables will exist on blockchains as tokens and they would be freely traded. Also, you never know what kind of innovations developers might come up with. So, we could have use cases of NFTs that we can’t even imagine right now.