Lately, you can’t go anywhere on the internet without stumbling across tweets, memes, or newspaper articles about NFTs. They seem to be all the rave these days, and almost everyone has something to say about them.
But what exactly are NFTs? If you find yourself asking this question, keep reading! In this article, we break down everything you need to know about NFTs, including what they are, how they work, and how they differ from cryptocurrency.
What Is an NFT?
Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata. These codes and data distinguish them from each other. NFTs digitally represent real-world objects such as music, gaming perks, art, and videos. They can be bought and sold online with cryptocurrency.
How Does an NFT Differ from Cryptocurrency?
Cryptocurrency is fungible, meaning that they are equal in value, and you can trade them in exchange for another. For example, if you trade a bitcoin for another bitcoin, you still have the exact same thing. Cryptocurrency’s fungibility makes it a trusted medium of exchange for commercial transactions on a blockchain.
NFTs, on the other hand, are non-fungible, meaning that they are unique and cannot be replaced with something else. NFTs have a unique digital signature that makes it impossible for them to be valued equally. This also means that you can’t exchange one NFT for another. If you want to exchange one video clip of a dance routine for another video clip of a dance routine, you can’t if they’re both NFTs.
How Does it Work?
NFTs exist on a blockchain, usually the Ethereum blockchain, although other blockchains support them too. All NFTs are minted or created from tangible and intangible objects such as art, music, GIFs, videos, collectibles, designer sneakers, video game avatars & skins, tweets, and much more.
NFTs are digital collector’s items, where the buyer obtains exclusive ownership rights, But instead of having a tangible charcoal portrait up on your wall, you’d get a digital file. Two people cannot own an NFT at the same time. An NFT’s unique data makes it easy to verify ownership in case of a dispute. If you created or own an NFT, you can also store metadata within the NFT, such as an artist’s signature.
How to Buy an NFT?
If you’d like in on the NFT scene, the first thing you need to do is set up a digital wallet that helps you store NFTs and cryptocurrencies, such as Ether. Most NFT providers don’t accept other cryptocurrencies.