Non-Fungible Token (NFT)

Jan 20, 2023 | Updated Jan 20, 2023
An NFT, or non-fungible token, is a digital asset that represents ownership of a unique item or asset including art, music, in-game items, and other forms of media.

What Exactly is a Non-Fungible Token (NFT)?

NFT could represent anything from a piece of art to a collectible item to a virtual real estate property. What sets NFTs apart from other digital assets is that they are stored on a blockchain, a decentralized and secure digital ledger. This means that NFTs can be easily bought, sold, and traded online, and the ownership and authenticity of the asset can be easily verified.

So what makes NFTs unique? Here are a few key points:

  • Non-fungibility: As the name suggests, NFTs are non-fungible, meaning that they are not interchangeable and have a unique value. This is in contrast to cryptocurrencies like Bitcoin and fiat money, which are fungible and interchangeable. For example, the value of a fiat currency like one dollar will always be equivalent to another dollar. Similarly, one Bitcoin will be equal to the value of another Bitcoin. 
  • Authenticity: Because NFTs are stored on a blockchain, it is easy to verify the authenticity of the asset. This is particularly important for things like art and collectibles, where authenticity can be a major factor in determining value.
  • Ownership: NFTs provide a clear record of ownership, making it easy to track who owns a particular asset and to transfer ownership when the asset is sold.
  • Flexibility: NFTs can be used to represent a wide range of assets, from digital art to virtual real estate. This makes them a versatile tool for buying, selling, and trading a variety of different types of assets.

Examples of NFT

Use-cases and applications of NFT include:

  • Digital art: One of the most popular uses of NFTs is to sell digital art. Artists have been able to use NFTs to sell their work online, and in some cases, digital art NFTs have sold for millions of dollars.
  • Collectibles: NFTs have also been used to create and sell virtual collectibles, such as CryptoKitties, which are digital versions of collectible trading cards. NBA Top Shots is another popular NFT collection of basketball collectibles that allows fans to trade, sell, and buy basketball digital file footage, video clips, etc.
  • Gaming items: Many online games have started to use NFTs to represent in-game items, like weapons, armor and other virtual possessions; it allows players to trade and sell those items on secondary marketplaces.
  • Music: Musicians and bands have started to use NFTs to sell album art, concert footage, and other types of music-related content. NFTs have a unique ID and metadata which cannot be duplicated by any other token. For example, a concert or event could use NFTs as digital tickets, in which each ticket has a unique identifier meant for only one owner.
  • Videos: Creators of digital content, like youtubers and twitch streamers are using NFTs as a way to monetize their work and make them ownable.
  • Social Media: Some high-profile Twitter users have created NFTs out of tweets, which were then sold for thousands of dollars.

The mainstream adoption of non-fungible tokens has grown exponentially in the past few years. As an emerging digital economy, Non-Fungible Token (NFT) will break the barriers of middlemen and will provide a secure transaction interface to aspiring artists and digital creators to showcase and monetize their original digital content, gain access to a global audience, and transact directly with buyers. Not only digital assets, but NFTs can revolutionize the virtual real estate industry, virtual games, online shopping, and remote working where managers can hold seamless virtual meetings with their employees. The economic applications of NFT are limitless and it is needless to say that many industries will be greatly benefited from this emerging technology.

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