Last Updated on February 1, 2022 by Arty Fisher
When CryptoKitties were released in late 2017, people started to wonder what a non-fungible token (NFT) was. If you are looking for an answer to the question “what are NFTs,” this article will help you understand what they are and how they can be used.
NFT stands for Non-Fungible Token. An NFT is a type of “cryptoasset” that represents something unique (e.g. a collectible, an artwork, a virtual game item). Unlike cryptocurrencies like Bitcoin, there are no two identical NFTs.
Welcome to the future
Non-fungible tokens represent a new way for developers to create digital goods like collectibles or unique artwork that can be traded on a blockchain. Because each token is unique, it allows for digital ownership of items that have value, like a painting created by an artist.
Because these NFTs are also “tokens” they can also be transferred on a blockchain platform in the same way as Bitcoin or Ethereum transactions. This means they are able to take advantage of all the features of existing blockchains while also opening up new ways to trade digital assets such as artwork and collectibles.
A “fungible” object can be replaced by another object of the same exact kind without any effect. Dollars, for instance, are fungible. If you have a one-dollar bill and give it to me, I can go spend that dollar somewhere else. That’s because all one-dollar bills are the same. Anybody who receives a dollar from me can use that dollar in their transaction instead of having to get their own dollar from me or anyone else.
So, to recap: NFTs are a new type of crypto tokens. They are designed for real-world applications and have the potential to play a major role in the future of mainstream adoption. To get a better idea of how they work, it’s important to understand that NFTs are not just another kind of crypto token; they’re a completely new asset class altogether.
NFTs vs Cryptocurrency
NFTs offer something that cryptocurrencies do not: ownership. The main reason why most investors entered the crypto market was to make money by trading cryptocurrencies or ICO tokens. It’s true that when you buy an NFT, you can trade it on an exchange and make money that way, but there’s also the option to use it as intended: by paying for something directly from your wallet.
NFTs bridge the gap between the digital world and the real one by allowing physical objects to be represented in a virtual environment. As we’ve already seen with Cryptokitties, NFTs can represent unique digital collectibles – but they can also represent music rights, event tickets, artwork and more. Essentially any real-world asset can become an NFT.
Non-fungible tokens are an important part of the crypto community. NFTs are a new form of crypto collectibles that can have value, but also carry with them ownership, privacy, and other characteristics of a blockchain.
There are many innovative companies working on NFTs that are poised to disrupt a range of industries. It’s possible that one day you’ll be able to buy an NFT representing anything from concert tickets to real estate.