What are NFTs: characteristics of this business digital
If you have been hearing about NFTs for some time and you are not sure what it is, we will try to clarify in this post what makes this non-fungible token unleashing a revolution in the digital ecosystem.
What are NFTs?
The first step in understanding how these digital “products” work is to clarify their definition: NFTs or Non-Fungible Tokens are unique digital assets that cannot be replicated or modified, whose authenticity is proven and whose purchase and sale traceability is recorded in a smart contract .
They allow you to acquire complete and sole ownership of a good that generally only exists on the internet: an image, a gif, a design, a video… even a tweet!
What can we consider an NFT?
The interesting thing about the NFT marketplace development. is that it is infinite. What does this mean? Well, any digital content is likely to become an NFT . How? Thanks to blockchain technology, it is possible to store data about the author, origin, traceability or route of the file, the transactions that have been carried out with it… In this way it is possible to guarantee the authenticity and uniqueness of the assets and grant them that value that gives them to NFTs .
Therefore, despite being a term closely linked to the world of art and video games, this form of digital business can exist wherever we imagine it, as long as there are willing buyers.
What characteristics do these NFT assets have?
One of the main characteristics of NFTs is, as we said, their digital nature. These are goods or content that remains in the digital environment. That is to say, summarised in its minimum and most basic expression, it is a file hosted on a server.
It also has other features:
Uniqueness: there can be infinite copies of these assets, and very easily identical as they are digital files, however, only one person will own the original whose authenticity can be proven thanks to blockchain technology. It is easy to make an analogy, in this sense, regarding physical works of art: Van Gogh’s Starry Night will have been reproduced thousands of times around the world and in different formats, but the value lies in the proven original of the work. , the unique and irreproducible version of the painter’s painting.
Indivisible: NFTs are sometimes wrongly associated with digital currencies such as cryptocurrencies . For this reason, they are associated with the ability to divide their value, as if in the case of euros we were talking about cents. Instead, NFTs have a value as a whole asset, it is not possible to divide them.
Unalterable: part of the value of this type of digital asset is given by the data that accompanies it and certifies its authenticity, previous purchases and sales, author… For this reason, it must be true data, not manipulated, which is possible thanks to , in addition to blockchain technology, smart contracts (Smart Contract) that prevent the destruction, replication or change of information.
Full Ownership — When an NFT is purchased , ownership of that asset becomes entirely with the buyer. That is, unlike other goods such as a music disc or a movie, in the transaction you do not acquire the license to enjoy them, but their property.
Verifiable: just as we talk about the unalterable nature of NFTs, we can also highlight the possibility of verifying each movement that is made with this asset, through the aforementioned blockchain . Another aspect that differentiates it from other tangible goods for which we do not have a history of purchases and sales.
How to buy NFTs?
Anyone can buy NFTs , but not in any way, since the transaction cannot be done using traditional currencies such as the euro or the dollar. The first step for the purchase of an NFT (Non-Fungible Token) is the purchase of another type of token, a cryptocurrency similar to Bitcoin, the Ether (ETH), which will be used as a means of payment. Once you have your wallet to operate in Ethereum you will be able to access the multiple NFT markets that you will find on the network. Some examples of these NFT markets are: OpenSea, SuperRare, Sorare or Nifty Gateway.
What is the difference between NFTs and cryptocurrencies?
Now that you know a little more about NFTs , you will know that these tokens do not share many of their characteristics with the more widespread cryptocurrencies . Some of their differences are:
NFTs are not intended to function as a payment method or money.
NFTs , as their name suggests, are non- fungible , which means that they are irreplaceable by another token of the same value, because they are unique. Instead, cryptocurrencies are fungible, meaning 5 Bitcoins are worth the same as 5 other Bitcoins.
NFTs cannot be split, unlike cryptocurrencies . The sale of an NFT must be complete, a portion of it cannot be sold.
However, not all are differences, something that NFTs and cryptocurrencies share in the blockchain technology that supports them. A database made up of a decentralized computer network secured with cryptography in which all operations carried out with the tokens are recorded.