Non-Fungible Token (NFT) Definition
A Non-Fungible Token (NFT) is a type of cryptographic token on a blockchain that represents a unique item or piece of content. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged on a like-for-like basis, NFTs have unique attributes that make them distinct and not interchangeable with other tokens. They are used to prove ownership and authenticity of digital assets like art, music, games, and other forms of creative work.
Non-Fungible Token (NFT) Key Points
- NFTs are unique digital assets secured on a blockchain.
- They are not interchangeable like cryptocurrencies such as Bitcoin or Ethereum.
- NFTs are used to prove ownership and authenticity of digital assets.
- They have been used for digital art, music, games, and other forms of creative work.
- The value of an NFT is subjective and depends on its uniqueness and the demand in the market.
What is a Non-Fungible Token (NFT)?
A Non-Fungible Token (NFT) is a kind of digital asset that uses blockchain technology to link with a unique digital item. The term “non-fungible” means that the token is unique and cannot be replaced with something else. For instance, a Bitcoin is fungible — if you trade one for another Bitcoin, you’ll have exactly the same thing. But if you were to trade an NFT, you might get something completely different in return, like a digital cat, a piece of digital art, or even ownership of a piece of real estate.
Why are Non-Fungible Tokens (NFTs) important?
NFTs are important because they introduce scarcity to the digital world. By tokenizing something, you can prove that it’s unique and that there’s a limited quantity of it. This creates value through rarity. NFTs also allow for the ownership and provenance of digital assets to be tracked and verified, which can help prevent fraud and counterfeiting.
Who uses Non-Fungible Tokens (NFTs)?
NFTs are used by digital artists, musicians, game developers, and creators of various types of digital content. They are also used by collectors and investors who buy and trade them, often for high prices. Some businesses and organizations use NFTs to tokenize assets and goods.
When were Non-Fungible Tokens (NFTs) created?
The concept of NFTs has been around since 2012, but they didn’t gain significant attention until 2017 with the launch of CryptoKitties, a game on Ethereum that allows players to purchase, collect, breed and sell virtual cats. Each cat is an NFT, with its own unique traits and characteristics.
How do Non-Fungible Tokens (NFTs) work?
NFTs are created, or “minted,” on a blockchain, a type of distributed ledger. Each NFT contains distinguishing information recorded in its smart contract, which is its proof of authenticity and ownership. This information makes each NFT different and unable to be replicated. When an NFT is bought or sold, the transaction is recorded on the blockchain, creating a verifiable provenance.
