What are NFTs (Non-Fungible Token)

William Meller - What are NFTs (Non-Fungible Token)
An NFT is a digital asset with unique properties, bought and sold online, verifiable via the blockchain ledger with a unique token to create a digital certificate of ownership.

If the GIF of a cat was sold for $690,000 and a tweet from Jack Dorsey for $2.9 million, something is happening, right?

NFTs are like special stickers or trading cards that you can only get online. 

Just like how you collect stickers or trading cards and some of them are rare and more valuable than others, NFTs work in a similar way. 

They can be things like digital art, videos, music, or even tweets that are unique and special. They can be collected and bought and sold like a physical collectibles.

Think of it like virtual stickers, each one is unique and special and can't be replaced by another one.

NFT stands for "non-fungible token." 

This means that it is a unique digital item that cannot be replaced by something else. 

A good example of an NFT is a digital art piece. 

The artist creates the art and then "mints" it as an NFT. This means that they are making a unique digital version of the art that can be bought and sold just like a physical painting. 

Another example of an NFT can be a tweet that is considered valuable. The tweet is unique and cannot be replaced by another tweet. So, it can be considered a non-fungible token.

Fungible means that something can be easily replaced by something else that is exactly the same. 

For example, a dollar bill is fungible because any dollar bill can be exchanged for another dollar bill of the same value.

Non-fungible, on the other hand, means that something is unique and cannot be replaced by something else. 

For example, a rare painting is non-fungible because there is only one of it and it cannot be replaced by another painting.

So, in simple terms, fungible items are interchangeable, and non-fungible items are unique and one-of-a-kind.

A Non-Fungible Token or good has unique properties, just like a piece of art from Leonardo Da Vinci, making it have a different value from other similar tokens or goods.

NFTs can really be anything digital (such as drawings, music, memes, etc.), but a lot of the current agitation is around using the tech to sell digital art. 

What Is the Business?

These NFTs can work like any other speculative asset, where you buy it and hope that the value of it goes up one day, so you can sell it for a profit. 

NFTs work like cryptographic tokens even stored in digital wallets, but, unlike cryptocurrencies such as Bitcoin or Ethereum, NFTs are not mutually interchangeable, hence not fungible. 

While all bitcoins are equal, each NFT may represent a different underlying asset and thus may have a different value.

NFTs can be used for a variety of things, but one of the main uses is for buying and selling digital art and collectibles. 

Artists can create unique digital artwork and "mint" it as an NFT, which means that they are creating a one-of-a-kind digital version of the artwork that can be bought and sold like a physical painting. 

This allows artists to make money from their digital creations and for collectors to own and display one-of-a-kind digital artworks.

NFTs can also be used for things like virtual real estate, in-game items, and collectible items in blockchain-based games.

Another use case for NFTs is in the music industry, where musicians can mint unique digital assets like songs, album art, or even concert tickets, which can be bought and sold by fans.

Overall, NFTs allow for the creation, buying, and selling of unique digital assets, and it's a new way for creators to monetize their digital creations and for collectors to own one-of-a-kind items.

But it is important to know that is the same mindset as buying a painting of a famous artist. If you buy it, it does not mean you now have the copyright (as the author) of that art, you are just the owner, a unique owner of a unique piece of art.

The ownership of an NFT works in the same way! It does not grant copyright or intellectual property rights to whatever digital asset the token represents. 

In that sense, an NFT is merely a proof of ownership that is separate from the copyright.

While someone may sell an NFT representing their work, the buyer will not necessarily receive copyright privileges when ownership of the NFT is changed and so the original owner is allowed to create more NFTs of the same work. 

Anyone can create an NFT. All that's needed is a digital wallet, a small purchase of Ethereum, and a connection to an NFT marketplace where you'll be able to upload and turn the content into an NFT or crypto art. The unique identity and ownership of an NFT are verifiable via the blockchain ledger.

Essentially, any digital representation can be purchased as an NFT. But there are a few things to consider when buying one, especially if you're a newbie. 

You'll need to decide what marketplace to buy from, what type of digital wallet is required to store it and what kind of cryptocurrency you'll need to complete the sale. 

Some interesting facts:
  • The first tweet from Twitter boss Jack Dorsey was sold for $2.9 million
  • NFTs are traded since around 2017
  • The first known NFT was created by Kevin McCoy and Anil Dash in May 2014
  • The market exceeded $10 billion in transactions, in the third quarter of 2021
  • The GIF of a cat (Rainbow Cat) was sold for $690,000
  • A NFT marketplace, OpenSea, had $2.6 billion of sales just in October 2021
  • A single LeBron James highlight NFT fetched more than $200,000
  • The world’s largest NFT museum is opening in New York (111 West 57th Street)

Non-fungible tokens are an evolution of the relatively simple concept of cryptocurrencies. Modern finance systems consist of sophisticated trading and loan systems for different asset types, ranging from real estate to lending contracts to artwork. 

By enabling digital representations of physical assets, NFTs are a step forward in the reinvention of this infrastructure. 

Of course that the criticism of NFTs comes from the traditional art world because it’s scared of the disruption

Okay, what are NFTs in one paragraph?

An NFT is a digital asset with unique properties, bought and sold online, verifiable via the blockchain ledger. With NFTs, artwork can have a unique token to create a digital certificate of ownership (not changing the author's copyright) that can be bought and sold.

In conclusion, NFTs, or non-fungible tokens, are a revolutionary new way to buy and sell unique digital assets. 

Whether it's digital art, virtual real estate, in-game items, or collectible items in blockchain-based games, NFTs allow creators to monetize their digital creations and for collectors to own one-of-a-kind digital assets. 

With the explosion of digital content and the growing popularity of blockchain technology, NFTs are poised to change the way we think about ownership and value in the digital world. If you're an artist, musician, or gamer, NFTs offer a new and exciting way to showcase and monetize your creations. 

And if you're a collector, NFTs offer the opportunity to own truly unique and special digital assets. 

So, don't miss out on the NFT revolution, start exploring the world of NFTs today!

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