We all know that there's been a huge buzz surrounding Non Fungible Tokens and a lot is us have been hearing that NFTs are the future - be it a piece of digital art, a piece of digital land etc. In this article, let us explore what Non-Fungible Tokens are and what does it mean to own one.
Before getting into NFT's, let us understand a little bit about the difference between Fungible and Non-Fungible Tokens.
A fungible asset is an asset that has the ability to be swapped evenly with an asset of the same type i.e they are interchangeable.
For ex: A 100$ bill can be swapped with another 100$ bill or two 50$ bills. This makes the fiat currency - a fungible asset. Similar to that, bitcoin and ether and both fungible assets. One bitcoin can be swapped to another bitcoin(when we say swap, think of transactions, if X gives Y 1 bitcoin as loan, Y might spend that bitcoin, but another new one and give it to X - it doesn't make any difference).
A non-fungible asset is an asset that cannot be interchanged.
For example: If X makes Lasagna at their home and Y makes a Lasagna at their home, even if they use the same ingredients and the same recipe, they may not turn out to be the same and hence are non-fungible in nature.
Let us understand some more terminologies before we move to NFTs.
What is an asset? Something useful/valuable. It could be an object, an expertise, a cryptocurrency etc.
What is a market? Market is a physical or digital space where once can buy, sell, exchange or trade goods/services.
What are tokens in the crypto world? Token are used to attribute value to an asset. They can represent a stake, voting rights, toll, currency, store of value, ownership or can be multifunctional in nature. Tokens themselves don't have any value, they gain value from the assets they represent.
Now that we have a clear idea of what the various terminologies mean, let us look at
- What are NFTs?
NFTs or non-fungible tokens can represent a digital asset that is unique in nature. A piece of digital 3-D art created by you will not be the same as another piece of 3-D digital art created by someone else. This is what makes NFTs so lucrative because it is a way to own uniquely created digital assets. The ownership of NFTs is recorded on the blockchain using digital agreements called smart contracts. These smart contracts ensure that the all the details of the NFT along with the price associated with the NFT, its contract address etc. is transparently available for exchange/trade amongst various owners.
NFTs are becoming popular because they have brought about a secure way of creating digital ownership of scarce material like digital art, videos, animations etc. The ownership can also be easily transferred and traded online using secure blockchain contracts at the backend.
As an artist, you could create your own digital assets and mint them for trading. As a collector, you could purchase the minted NFTs and bid on them using your cryptocurrencies(different ones can be used in different platforms) to become the owner of something cool and interesting!
Here are some interesting websites where you can find/mint NFTs: opensea.io mintable.app rarible.com
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