Beginner's Guide To NFTs

Republished By Plato

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In this guide, you will understand what NFTs are and how they work.

NFT stands for Non-Fungible Token.

Fungibility refers to the ability of an asset to be exchanged or substituted with similar assets of the same value.

Fungible means something can be exchanged or substituted and will hold the same value. It’s interchangeable like the dollar, gold, casino chips, bitcoin, ethereum, or frequent flyer loyalty points.

NFT is a digital asset that represents internet collectibles like art, music, and games with an authentic certificate or unique digital signature created by blockchain technology, which makes it one of a kind. Therefore, it cannot be exchanged nor can it be distributed publicly.

NFTs are distinct, easily verifiable digital assets that can represent items such as digital artworks, music, or even memes stickers, and meaningless graphics.
NFT is a unit of data stored on a digital ledger, AKA the Blockchain, that certifies a digital asset to be unique and therefore not interchangeable. We don’t need to worry about copies of these digital items. Although they are indeed available for anyone else to get, NFTs are tracked on blockchains to provide the owner with proof of ownership that is separate from copyright.

Apart from digital artworks, NFTs can be the proof of ownership for almost anything, from games items, fashion-related items, collectibles, name services and domains, licenses and certifications, or even virtual worlds. Everything is traceable on the blockchain. NFTs can serve as revolutionizing entities.

The idea behind NFTs is that you have this digital signature in a way that a great work of art might bear the signature of the person who created it, so you can always look at the original and say, “Yes, this is the real one. This is authentic.” An NFT winds up having that through the blockchain where the information is recorded.

NFTs are cryptocurrencies, but unlike fungible cryptocurrencies like bitcoin, they are completely unique. They exist as a string of numbers and letters stored on a blockchain ledger. This information can contain who owns the digital assets, who sold them, and when it was sold. This information is also encrypted, ensuring the NFTs authenticity and scarcity.

Bitcoin and ethereum are fungible tokens, which means that if you trade bitcoin or ethereum for one another, you will have the same value or item in return, basically money.

Crypto punks are a remarkable example of NFTs. They enable you to buy, sell and store 10,000 collectibles with the proof of ownership being stored on the ethereum blockchain.

With NFTs, you end up having scarcity because they are non-fungible and because of that there is only one of these tokens that can exist. It can’t be traded for anything similar because there is nothing similar that exists. So you wind up getting that scarcity and that limitation which helps drive some of the prices.

A lot of people are excited about NFTs because, unlike with the blockchain underlying bitcoin, you can do a lot more complex things with it. You can wind up setting terms within it such as: You know the original creator upon each resale of this asset will get (x-amount), or you can take it and you have an NFT that itself mints other NFTs.

When it comes to digital art, a buyer owns the original digital painting, but the person can’t keep others from copying the image and sharing or changing it online.

One of the concerns of NFTs is that anyone can essentially go on a lot of these marketplaces and say “I’m the person who created this token, and it can be really hard to verify that, especially if you don’t know who they actually are or they’re saying someone that they’re not. ”

People are now willing to pay hundreds of thousands of dollars for NFTs. NFT has enhanced media exposure and special perks for aspiring artists. This popularity of NFT creates new opportunities for new art platforms motivating people to buy art from internet platforms and promoting copyright or originality of digital assets.