What is Blockchain & What are NFTs?
NFTs are changing the digital world as we know it
The majority of people do not know what NFTs are and what they are used for. This article aims to explain the over arching question of what an NFT is, as well as more specific questions like what is NFT art, what is a NFT marketplace, and how do you create, sell and display a NFT?
What is a NFT?
NFT stands for “Non-Fungible Token”. A “NFT” can be thought of as a unique digital collectible. These digital assets can take the form of an image, video, GIF, album and more.
Whats separates a “Non-Fungible Token” and a “Fungible Token”? The difference is that a Non-Fungible Token is unique and a Fungible Token is not. An NFT is either completely unique in the sense that it has no exact replicants, or it is part of a collection where it has a couple identical twins. In the case of cryptocurrencies, coins are no different from each other. A bitcoin that you own has the same value and is identical to a bitcoin anyone else might own. NFTs are non-fungible and cryptocurrencies are fungible.
To reveal the difference between non-fungible and fungible it is helpful to use an analogy. A cryptocurrency can be thought of as a dollar bill and NFTs can be thought of as baseball cards. One dollar bill, or cryptocurrency, is indistinguishable from another. For baseball cards, or NFTs, you can trade them, but each is unique in their own way and has a different value.
What is NFT art?
Now for more specific questions like what is NFT art, a NFT marketplace, and how do you create, sell and display an NFT?
NFT art is digital art that can be bought and sold. Digital art can take the form of a jpg, gif, mp3, video and more. What gives digital art value is uniqueness. If Van Gogh’s art was replicable through a simple screenshot, his unique paintings would not be valuable. NFT art is created to be scarce. The artist can determine whether they want to create a single copy of an art piece or make multiple pieces.
Some people argue that NFTs hold no value because anyone can take a screenshot of the image and have a replica or copy of the artwork. NFTs have an artist signature by being linked to a blockchain. Blockchain is code that authenticates a NFT as being one of a kind, real and shows its past trade history. In a way, blockchain acts as an artist’s signature and authenticates or verifies the work.
What are NFT marketplaces?
NFT marketplaces are websites where people can buy and sell NFTs. Artists will sell off work and anyone with a computer and money can purchase the art.
What is blockchain?
Blockchain can be thought of as an unchangeable list that keeps track of the creation of NFTs and their journey of being bought and sold by collectors. This list can be thought of as an unalterable ledger that records information. The technology lets individuals make monetary deals directly with each other without the need for a bank, government or third party to regulate trades that occur. Blockchain is decentralized which means that there is no regulation by third parties. What legitimizes the transactions is code.
Blockchains are digital ledgers that use cryptography. Cryptography is code that is encrypted (written in a secure unintelligible way) so that it cannot be edited or tampered with by outside people. When a trade occurs cryptography is used and individuals verify the code by time stamping it and placing it into the ledger where it cannot be changed. This peer-to-peer network of computers verifying the transactions is what makes the code agreed upon and unchangeable.
In the world of NFTs, creating an NFT is called “minting”. Creating an NFT or “minting” one occurs when an individual assigns code to the digital collectible. Assigning code to the digital collectible whether it be a photo, video, song, gif, etc is what attaches the artwork to the blockchain.
If you don’t attach your music NFT, art NFT or a NFT of any kind to the blockchain via code then it is not an NFT. Linking a digital collectible to the blockchain is what makes something a NFT(Non-Fungible Token). Linking a digital collectible to the blockchain is what verifies that the piece is unique, original, has a specific owner, and shows the sales history of the asset.
NFT marketplaces need blockchain technology
The blockchain technology is what allows an NFT to exist and be bought and sold without something like a store or bank regulating creation and sales. Anyone can point to an NFT’s code to see who created it, how many are in existence, who the owner is, when it was made, sold and resold.
We hope this article helped deepen your understanding of NFTs and blockchain. If you would like to learn more check out the rest of our blog posts, follow us on Twitter and Instagram @poweredby_pw.
