If you’ve been living in a crypto world, you’ve probably heard of the term NFT (Non-Fungible Tokens). Maybe you are a cynic, a believer or possibly you still don’t really understand what precisely NFT’s (Non-Fungible Tokens) are. In any case, this article is for you to develop your understanding of “NFT” or “Non-Fungible Token”.
Non-fungible tokens are unique, digital assets with blockchain managed ownership. Most discussions about non-fungible tokens started when the idea of fungibility was introduced which means that they can be replaceable or can be replaced by other identical items. We think this over complex things.
To get a better understanding of what might comprise a non-fungible asset, just think about most of the things you own. The couch you’re sitting on, your laptop on which you are watching a movie, your cell phone, or any other thing you could go and sell on shopping websites. It means that fungible assets are actually strange.
A currency is a traditional example of fungible tokens. Ten dollars is always ten dollars no matter the serial number on the specific ten-dollar bill, or whether it’s ten-dollars present in your bank account. The capability to exchange ten-dollar bills with another ten-dollar bill makes currency fungible. Acknowledge that fungibility is corresponding, it only applies when differentiating numerous things.
Non-fungible tokens are totally opposite of fungible assets. Tickets, in-game stuff, even avatars are all non-fungible tokens, they only vary in their traceability, interchangeability, and acquiescence. non-fungible tokens offer ownership and management permission to the users.
Due to blockchain technology, non-fungible tokens change the user and developer relationship with their assets by providing them possession. Non-fungible tokens are unique and cannot be split. As compared to fungible tokens, the critical transformation of non-fungible tokens is offering a way to record the possession of invisible and unique assets.
Such sort of possession can be kept in a blockchain, making it evident and tamperproof. Non-fungible tokens don’t prevent others from approaching the possession, it simply captures it and finds its value as well as the relationship with all the data in the blockchain.
Due to the non-fungible feature of NFTs, it can be utilized to signify a large number of real-world goods, such as tickets, phones, any ring, and so on. NFTs allow us to tokenize anything valuable and record the possession of it, thus to build a relationship between information and value.
NFT is a sort of blockchain-based non-fungible digital asset, and NFT-compatible blockchain is a database that keeps the record of valuable things. In other words, non-fungible tokens can connect anything with non-fungible attributes; realize tokenization of the real world. And form a world of digital assets with value exchange.
We can store the information of weapons, jewelry, or any other collection on the blockchain in the form of an NFT for updating, circulating, or exchanging. In simpler words for your understanding, for example, we can develop an NFT for a piece of jewelry. Its owner only needs to declare the NFT’s metadata to show his possession of the piece of jewelry when he/she wants to sell it.
The certification is digitally recordable since the possession of a piece of jewelry is recorded in the blockchain, which also prevents the imitation and fraud of the jewelry. The unique features of NFTs allow greater liquidity at the same time providing arbitrage opportunities to the users.
In the next post in this series, we explain the usage and advantages of NFTs to flourish and highlight their most interesting aspects. Stay tuned!