Article

What is NFT?

Augustinas

October 18, 2021

There has been a very high level of interest in the NFT (non-fungible token) world lately. Everyone is asking what the NFT is and what is the main benefit of NFTs. For this reason, we decide to prepare a blog post that explains NFT in detail what benefits it own.

Probably, you hear a lot of the phrases like someone bought or someone sells or someone earned money in NFT, and I believe that eventually, it gained to you a willingness to know more about this next-generation solution that can be used helpful for everyone. However, once you understand how NFTs work, you’ll see there are additional use cases for this technology.

NFT simply explained

A non-fungible token also known as NFT is a type of digital token or asset. For instance, it could be digital paintings or digital trading cards. Important to notice, that the main benefit of the non-fungible token is when you buy a digital asset you also buy the rights to that specific asset because NFT (non-fungible token) is a piece of data that is owned by an address and whoever has the password to that address owns that piece of data (non-fungible token) and also that data is verified on a blockchain.

To be more specific, to understand non-fungible tokens in the context of blockchain, think of NFT as a digital asset that rights belong to you and blockchain verifies it.

Blockchain provides a unique opportunity to check the NFT’s history because in blockchain non-fungible token is always trackable. And also the metadata on the non-fundable token can never be altered by anyone. So it can be copied or stolen.

It’s important for understanding the economic concept of fungibility to fully understand NFTs:

Fungible items – because their value isn’t tied to their uniqueness, they can easily be exchanged with one another.

Non-fungible items – are not at all interchangeable in any way. Each NFT token has its own set of properties and isn’t worth the same as other tokens of the same type. Because of that, by creating a non-fungible token, creators have an opportunity to verify scarcity and authenticity to just about anything digital.

One of the biggest advantages of owning a digital collectible over a physical collectible like a Pokemon card or a rare minted coin is that each NFT contains unique information that makes it stand out from the rest and can be easily verified. Because each item can be traced back to the original issuer, the creation and circulation of fake collectibles are pointless.

Thus, the main advantage of NFTs is that they are unique and tamper-proof, which blockchain technology helps achieve.

Why NFT is so important?

Because of the way they transformed the gaming and collectibles market, NFTs have become extremely popular with crypto consumers and businesses alike. With the development of blockchain technology, gamers and collectors can become the immutable owners of in-game items and other unique assets, as well as make money off them.

For instance, gamers have a huge opportunity to sell digital assets they accrue during gameplay such as avatars, skins, or in-game currency on a secondary market.

For artists, it is also a fantastic opportunity to sell artwork in digital form directly to a global audience of potential buyers with proof of its authenticity. By the way, royalties can also be coded into digital artwork so that when NFT is resold to a new owner, the creator gets a part of the sale profits.

NFT (non-fungible token) is still at an early stage, when many possibilities have not yet emerged. So, if used properly, the NFTs can provide pleasing results for everyone. There is a lot of potentials that most definitely will get you excited about new business growth possibilities.

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