I’m going to explain what an NFT is in the most basic terms possible. NFT stands for Non Fungible Token. What makes NFT so special and why are people getting their hands on as many as they can?. To have a better understanding of what it is let me explain what fungible is.
What does fungible mean?
I never heard of that word you ask?. Well, Fungible means something is able to be exchanged or substituted and will hold the same value. It’s interchangeable like physical money, gold, casino chips, cryptocurrency or points you get at your favorite stores.
For example if I lend you 10 dollars cash and pay me back in two 5 dollars notes, to me who is receiving it is the same value. I wouldn’t mind receiving two 5 dollars notes, or 10 one dollar notes. Even though they are different they hold the same value.
So non-fungible could mean that the item, asset can’t be substituted for another because only one can hold the true value. It has unique attributes that makes it very unique to that one specific asset. For example, the Mona Lisa painting. Only one can really hold the true value. Even if I copy it to the exact replica 100% replicated. Only the original Mona Lisa will hold its value. Same goes for many things in the world, like the Eiffel Tower, the Statue of Liberty, etc.
The usage of NFT and why it’s so popular.
With the rise of cryptocurrencies, and it’s usage on the blockchain. People started a new trend of adding their digital product on a block-chain where it can’t be altered once it’s added to the blockchain. If you don’t know what a block-chain is, please research why block-chain technology is one of the greatest inventions of our current generation.
So with the usage of the block-chain, using Ethereum (ETH) the first NFT was created in 2014, which was a “Quantum” (see image below) which sold recently for $1.4 million dollars. These NFTs were added to the blockchain and this means with the technology of the blockchain you see which image was the original and which were the copies. This made it possible to own a piece of digital history, and as art ages it gets more valuable over time. Many art collectors are turning into NFTs and acquiring massive amounts of digital art.
A turning point for modern artists.
Artists now are creating digital pieces and adding it to the blockchain, creating an original but in the digital space which makes it much more scarce. Artists are also creating new sources of income for many of them. As with many of these platforms to browse NFTs, The artist gets a commission for each sale that occurs within the platform, if you buy a NFT from person A the original artist gets a cut of the sale for as long as this piece keeps circulating. A really popular place at the moment to look at NFTs is OpenSea.io.
It’s an exciting space, I believe the NFT space will continue to grow in the coming years with some popular use cases being: Digital Art, Virtual Land, Gaming, Collectibles, Finance and much more.