A Non-Fungible Token (NFT) is a non-interchangeable unit of data stored on ablockchain, a form of digital leader, that can be sold and traded. NFT’s are unique cryptographic tokens on a blockchain and cannot be replicated. It represents real world items like artwork and real estate. Tokenizing these assets helps buying, selling, and trading more efficiently, also reducing fraud activities. Like physical money, cryptocurrencies are fungible, that can be traded and exchanged. These fungibility characteristics make cryptocurrencies can be used as the secure transaction medium through the internet. Coming to NFT, each token is unique and non-fungible.
What is a fungible vs non-fungible asset?
The fungibility refers to the ability of an asset to be exchanged equivalently with another asset.An example of a fungible asset is the US Dollar, where you can exchange one dollar with another knowing that both have the same values. Non-fungible assets are valued differently based on their unique attributes and scarcity.
The Smart contract
Smart contracts are the digital contracts stored on a blockchain that are executed when predetermined terms and conditions are met. It can store small amounts of data in common data structures, which is a component of tokenization use cases that map token identifierto owner identifiers to track who owns which token.
A blockchain based tokens that each represent a unique asset like art-form ,digital content or media. An NFT guaranteed digital tokens of ownership for the asset.The NFTs are designed to satisfy some properties.
Unique or scare
How can we create NFTs?
Creation of NFTs can be done with the help of a process called minting, that Involves signing a transaction contain token details, then broadcasted to the blockchainand trigger a smart contract to create and assign to its owner.We can use Ethereum as platform for creating and insert blocks ,we will discuss more about Ethereum in upcoming blogs.The NFTs contain Token ID that is mapped to an owner and stored inside the smart contract. The User can verify ownership and reassign the token to the new owner by using this token ID.
Non-fungible tokens being utilized today?
NFT-based tickets - organizations/companies can distribute tickets for various events/shows using NFTs, it helps to reduce fraud validation and the owner verification.Digital Collectibles - Digital media contents can be trade and sold by using the NFTs using anyPublic platforms like polygon, Ethereum.Royalties-NFTs can be used as track royalties for famous art form, paintings, and media.
An example of how NFT changes the value of an asset.
Twitter CEO Jack Dorsey . Jack tweeted a link of the tokenized version of the first tweet “just setting up my twitter”. The NFT version of theThe first -ever tweet of Jack sold for more than $2.9 million.Jack acquired ownership for that tweet by tokenizing , and added to blockchain. Then itconsidered as an NFT asset.The NFT is gaining too much popularity within a short period, and it may be used for two purposes: trading and proving ownership of assets like digital objects and real estates.