Non-fungible tokens (NFTs) are digital assets that are provably unique, creating digital scarcity. They can’t be duplicated or divided. They have many use cases, including digital collectables, music, artwork, and in-game tokens.
A NFT (Non-Fungible Token) is a unique digital asset that can be in the form of any file such as an image or video that provides proof of ownership of the file to the owner.
The NFT lives on the blockchain which is a secure decentralised network.
A non-fungible token (NFT) is a cryptocurrency token that is indivisible and unique. One NFT cannot be interchanged with another NFT, and the whole cannot be broken down into smaller parts and used. NFTs offer myriad options for creating digital assets for Brands.
Why NFTs are so Important?
Non-fungible tokens have unique attributes; they are usually linked to a specific asset such as an image, gif or video. They can be used to prove the ownership of these digital assets.
Other tokens are fungible, in the same way as coins or banknotes. Fungible tokens are identical, they have the same attributes and value when exchanged.
With NFTs we are able to create, Unique Digital Assets, such as branded experiences or artwork, that are “non-fungible” and provable unique without a centralized intermediary.
This is a big deal as for the first time in human history, we have provable unique digital assets that can be maintained without a centralized intermediary or authority other than the blockchain itself.
Key Characteristics of NFTs
Rare: The value of NFTs comes from their scarcity. Although NFT developers can create any amount of non-fungible tokens, they often limit the tokens to increase rarity.
Indivisible: NFTs cannot be divided into smaller denominations like bitcoin satoshis. They exist exclusively as a whole item. Indestructible: Because all NFT data is stored on the blockchain via smart contracts, each token cannot be destroyed, removed or replicated. Ownership of these tokens is also immutable, which means gamers and collectors actually possess their NFTs, not the companies that create them. This contrasts with buying things like music from the iTunes store where users don’t actually own what they’re buying, they just purchase the license to listen to the music.
Verifiable: Another benefit of storing historical ownership data on the blockchain is that items such as digital artwork can be traced back to the original creator, which allows pieces to be authenticated without the need for third-party verification.
Unique: This is perhaps the most significant characteristic of them all. NFTs have a permanent information tab that records their uniqueness. Think of this information as a certificate of authenticity.