NFTs: Explained
2020 was the year of NFTs. You might have heard NFTs being sold for as high as freaking $69 Million. Are you still wondering what is this all buzz about?
Don’t worry, I got you covered. Let's see what NFT is and why are they important.
NFTs stand for Non-Fungible Token. Lets break it word by word.
Fungible mean something that is exchangeable. For exmable, a hundred rupee note is fungible. It can be exchanged for another hundred rupee note or two notes of fifty rupees. On the other hand, Non-fungible is exactly opposite. It means some asset which is not exchangeable and is unique. For example, Mona Lisa painting is unique and can’t be exchanged for other art. Other example might be a cricket world cup ticket.
And token is just a certificate which verifies the ownership of a Non-fungible asset which lives on blockchain.
Hence, NFTs are certificates that live on blockchain and represent ownership of unique items. The ownership and unique properties can be publically verified by anyone due to intrinsic properties of blockchain.
Now, you might be wondering why are they important.
Well, before NFTs it was really hard to track ownership of digital assets like a digital art or online tickets . Such assets can be easily copied and distributed.
But now with NFTs it is possible to own a digital assets. Creator can create NFT for any digital asset and all the information about that art like who is the owner, it unique hash representing that will be stored in blockchain forever. No one can change that information and hence anyone can prove the ownership of digital assets. Moreover, they can be easily transferred from one person to another. Anyone can track the history of any asset by simply looking for it on blockchain.
Technically as they are smart contracts on blockchain they can also be programmed to reward the original creator whenever NFT is sold or exchanged further. Imagine how great it would be for an artist that whenever it’s concert ticket in form of NFT is sold in secondary market, he will always earn some share from that as well.
Also, they are not limited to digital assets only. They can be used to represent any physical assets as well. For example, anyone can create NFT representing a physical art to real-estate property.
NFTs these days are just seen as collectibles. But they are much more than that. They can be used to represent any asset which is unique and needs proof of ownership. One day you won’t be surprised to purchase real-state and have its NFT as proof of ownership.
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