NFTs demystified for Beginners
In this story I will try to demystify NFTs for beginners — what are these and how they work.
NFT stands for Non-Fungible Token.
But Wait. Did I make it more unclear? What the heck is Fungible?
Fungible assets are the assets that can be exchanged for or substituted with another asset of the same value. Examples can be gold, dollar, euro, bitcoin, and even reward points you earn on your credit card.
A Non-Fungible Token or NFT is a digital asset representing collectibles on the internet, like art work, paintings, games, stickers, music etc., having unique digital signature created using blockchain technology. It cannot be exchanged or copied and have limited quantity. These are tracked on digital ledgers (blockchains) to provide the owner of the asset with a proof of the ownership. Ownership of an NFT is separate from copyright.
Buying/Selling NFTs
NFTs are sold on specialized marketplaces like Rarible, Opensea, NBA Top shots, SuperRare, Mintable etc. You can also buy/sell some NFTs via a compatible crypto wallet.
Are NFTs same as cryptocurrency?
Cryptocurrencies like Bitcoin, Ethereum etc. are fungible tokens, i.e., these can be traded in exchange for one another, and get the same value. The NFTs on the other hand are non-fungible, and are unique. They are stored on a blockchain and contains information like who is the owner of the digital asset, who sold them and when. The information is stored in encrypted form, to ensure the authenticity and scarcity of these assets.
Issues and concerns with NFTs
A buyer owns the original digital painting, but it can be copied by others and shared or changed. One of the main concerns with NFTs is that anyone can claim that they are the owner of the asset and it can be really hard to verify that.
The popularity of NFT creates new opportunities for new artists as more and more people are now willing to pay huge amount of money to buy NFTs. More and more mainstream artists are now involved in the space, especially from the world of music. Recently, Nashville band Kings of Leon announced their next album may arrive in the form of NFTs.
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