What are NFTs and How Does it Work?

You might be wondering how these things work in the cryptocurrency world. A single cryptocurrency coin is fungible—trade one for a cryptocurrency coin, and you’ll have the same thing. In other words, the famous Bitcoin is not one of those NFTs.

NFT. What is it!?

NFT stands for Non-Fungible Token. 

‘Non-Fungible’ means only one of its kind. It uniquely exists and can’t be replaced with something else.

Now… How does this ‘non-fungible’ thing work?

Let us give you an example of this one-of-a-kind concept. There are 52 kinds of different cards in a single deck. Each card is unique, with four different types of suits that have ranks based on values. If you have a single card on your hand and trade it with another card, you have another completely different card.

How does the ‘Token’ stand for these ‘Non-Fungible’ digital forms?

Imagine you’re an art collector visiting an art museum or an art gallery. As you roam around, several paintings and sculptures are on display. Of course, one form of art exists in that art museum or gallery you want to possess, and you’re going to purchase it no matter the cost. Before acquiring a piece of art, we ensure we got the authentic one—not a replica or fake one.

The piece of art bought from that museum or gallery might have a more remarkable price change than was purchased in the next few years. Trading them is the only way to ensure profit gain and find another piece of art.

So what is NFT (Non-Fungible Token) in the blockchain?

The none-fungible token (NFT) can exist in any digital form in the blockchain. They can be in the form of images, videos, music, or text.

So why is it in the blockchain-verse?

The blockchain allows the investor to verify the authenticity and ownership of an NFT.  Of course, you want to investigate the validity before buying one. Ease your worries about its authenticity, NFTs use a digital ledger to ensure authenticity and ownership. Each NFT exists in a data unit with its unique signature ownership embedded on a file, and duplication is not in its nature. So NFTs are bought with cryptocurrencies for transactions to be recorded when purchased.

Why does it even exist?

NFTs’ popularity exploded, leading many investors to wonder how to buy them. Ever since the pandemic, that percentage increased.

The skyrocketed price of these digital assets aroused more. It encouraged the movement of investors in migration of investing on other things—specifically on digital forms, that will surely surge in price gains in cryptocurrencies in the coming years.

NFTs can be anything in any digital form auctioned through the internet.

Sources

• NFTs, explained: what they are, and why they’re suddenly worth millions – The Verge
• What are NFTs (Non-Fungible Tokens)?
• NFTs Are Huge. But What Exactly Is A Non-Fungible Token? Here’s A 10-Point Guide
• How to Invest in NFTs | The Motley Fool
• Non-fungible token – Wikipedia
• Is it possible to make a copy of a non-fungible token? – Quora