What is NFT? Fungible Vs Non-Fungible
NFT stands for non-fungible token. To put it simply, a non-fungible token is a unique item that is verified through the blockchain. Let’s first discuss fungible vs non-fungible. When something is fungible, like dollars or bitcoins it means that every dollar or every bitcoin is worth as much as every other dollar or every other bitcoin.
For example, if I have $10 and I want to trade you a $10 bill for two $5 bills that is fungible because it’s the same amount. However, with NFTs, they are non-fungible meaning that they are all different prices and values. Another example, if you have a rare baseball card and you trade it for a pokemon card, they have different values.
How Do NFTs Work?
NFT’s can run on different cryptocurrency networks. The most popular at the moment is the Ethereum network, but other networks like Solana and TRON also provide the ability to create NFTs.
NFTs are created or “minted” through smart contracts, which is basically just code. Each NFT is represented as a token or tokenized so that each one is unique and can only have one owner at a time, and that owner is verified on the blockchain of the token.
The fact that NFTs are created as a token on the blockchain means that everything is open and transparent. For example, you can check an NFT and see who all the previous owners were and how much the NFT has been sold for in the past. It also means that it cannot be forged or duplicated, which is quite different from digital items that we are typically accustomed to.
What are NFTs Used for and Why are they important?
NFTs have a ton of use cases, and at the moment the largest use case is art. Keep in mind that NFT’s are almost always digital, meaning that instead of owning a canvas painting you own a digital piece of art. NFTs are important because it’s the first time in human history that artists can guarantee royalties on the art they make because it’s built into the smart contract when they create the NFT. This means that every time an NFT is sold from one person to another, the artist gets a piece of the pie.
It’s also the first time that digital works cannot be duplicated. If you’re old enough, you remember downloading music from Napster or Limewire. This was the process of duplicating and downloading digital music. You could pop a CD into the computer and burn it on another CD creating a copy. Or you can always right-click and save an image. With the blockchain, every NFT is verified so that’s no longer possible. Yes, you can still right-click and save the image, but that’s like saying you re-painted the Mona Lisa. It has no value.
Other NFT Use Cases
There are a ton of NFT use cases, but besides digital art, they are used for music, gaming items, domain names, physical items, and investment collateral. This is part of web 3.0.
Where can I purchase NFTs
There are a lot of different sites where you can purchase NFTs and depend on how familiar you are with cryptocurrency, some are easier to use than others. My favorite right now is NiftyGateway, which is also run by the folks that created the crypto exchange Gemini. Other NFT marketplaces include Opensea and Rareable. In order to use these marketplaces, you’ll need to set up a metamask account.