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What Is a Non-Fungible Token (NFT)?
Introduction
NTFs are exploding in popularity. In the music field, the Kings of Leon releasing an NFT-only album. In the social media field, Jack Dorsey's first Twitter Sellin for nearly $3 million. But what is a NTF?
A non-Fungible Token is a virtual asset based on blockchain technology, representing something unique and collectible. In order to better understand NFT, you can start with the word fungible. Fungible means something that something can be exchanged or replaced, and has the same value in the exchange process. Fungible assets include interchangeable assets such as dollars, gold, oil, and Bitcoin. For instance, if someone lends you $10 in cash and you return two $5 banknotes, the transaction is acceptable as the items in the transaction hold the same total value. Therefore, by contrast, non-fungible represents something irreplaceable and has unique properties that make it different from other things, such as painting, video game skins, or a crypto kitty which is the first true use case on the Ethereum blockchain in 2017.
NFTs are non-fungible tokens. Tokens refer to digital certificates stored in a secure distributed database called blockchain. Therefore, NTFs are public digital assets and verifiable intellectual property that is authenticated by the blockchain. In other words, non-replaceable tokens cannot be forged or copied as their authenticity is guaranteed through blockchain technology.
NFTs can be considered a certificate of ownership of a virtual asset, which is popular because it was created by a famous artist or world-class musician. These tokens can also be used in the game, or to help complete a collection. However, NFT and the virtual assets are essentially a long string of numbers and letters, which are codes that exist on the blockchain.
Are NFTs Tradable?
NFT comes in a variety of shapes, sizes, and uses. The use of purely collectible digital art NFT is quite limited. There is no doubt that you can replace them or trade them, but an NFT photo is no different from a normal photo in terms of practicality. However, some NFTs have practical uses in games, such as the famous CryptoKitties on the Ethereum blockchain, where the collected cats can be bred and passed on their characteristics to new cats.
How Is the Value of NFT Determined?
The value of NFT depends on what it represents. Encryption art is very similar to other arts. Its value depends on who created it, its artistic value, and the needs of other collectors. In fact, the value and rarity of NTF depend on a combination of many factors. For instance, if the NFT is part of a limited run or series, then a particular digital asset is usually more valuable than other digital assets.
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