What is an NFT?
NFTs are a term that has grown massively in popularity over the last five years, beginning as circulating ideas and quickly evolving into the pop culture scene, found in possession of everyone from influencers, to multimillionaires, investors, teenagers, and artists alike.
While some may think NFTs are a fad, and others are deep into NFT use, many are still left asking what exactly NFTs are? Thankfully the question of what is an NFT? Is not nearly as confusing as it might sound.
Non-Fungible Token
To begin understanding NFTs, we must first understand what NFT even stands for. NFTs are short for Non-Fungible Tokens. While I know this may not have any sudden meaning, don’t worry, we’ll explain.
When you hear non-fungible, an excellent way to think of it is non-replicable. NFTs are tokens—in any form they take—that cannot be replicated.
One of the best ways to understand what NFTs are is to understand what NFTs are not. Let’s compare an NFT to the US dollar. If someone trades one dollar for another dollar, both parties exit the exchange with the same value of the currency. Neither of their dollars will change in value, nor is it particularly unique from the other. For this reason, the US dollar is ‘fungible.’ Within the cryptocurrency world, Bitcoin operates the same way. If a person trades one Bitcoin for one Bitcoin, neither party leaves with anything more unique than the other. Therefore, Bitcoin is ‘fungible.’
NFTs have unique signatures utilizing blockchain technology that indicates their existence is unique or of a certain number of assets.
Why Would I Want an NFT?
You might still be asking, “what is an NFT?”, but even more so, why would you want one?
One of the uniquely interesting aspects of NFTs is that they operate quite similarly to art trading but are far more accessible.
Let’s examine a piece of art like the Mona Lisa as an example. There is one real original of the Mona Lisa in the Louvre in Paris. While people can take photographs or try to reproduce the painting, there is still only one Mona Lisa.
NFTs operate in the same space. Whether they be in the form of a visual image, a short film, audio, a 3D model, etc., NFTs are unique—typically artistic—assets. While someone could attempt to replicate them, the blockchain allows us to know which one is the original or is of a small amount created.
This is where the art trading aspect of NFTs comes into play. For example, a person may have an NFT photograph, while another possesses a soundbite NFT. The two could trade their NFTs based on each party’s perceived value. One might increase in value in the future, one might decrease in value. They may continue to be traded and exchanged, or they may be sold. But their worth is determined by the demand for them, each as a unique asset.
Why is NFTs Booming?
What is an NFT, and why are they booming?
NFTs are growing rapidly in popularity and circulation for many reasons, the top ones being accessibility and the rising necessity for digital assets.
Accessibility applies to NFTs in several ways. First, due to their artistic value, you do not have to be a crypto-trading professional to get involved with NFTs. You may purchase an NFT simply because you like it or think you see value in it. Trading happens individually and resembles art and asset trading far more than the stock market.
NFTs are also quite simple to create. Several platforms will help individuals link their tokens with the cryptographic blockchain, meaning anything from a teenager’s artwork to a professional musician’s one-time single can be made into NFTs.
One of the ways to answer the question, “what is an NFT?”, is to call it digital property; this is another reason NFTs are booming.
With the development of the metaverse, NFTs are a way to track digital assets. Whether it be artwork, property, clothing, or anything that exists digitally and needs a unique cryptographic identification can be an NFT. Due to this, NFTs are moving beyond token and art trading and into the future of the digital property.
The Best Way to Learn is to Get Involved
Maybe you still have questions about NFTs, or perhaps you want to learn more. The best way to learn about NFTs is to get involved with the economy they exist in! Websites like Crypto.com are great places to shop for, look at NFTs, and to even begin trading and exchanging them.
Start small, do your research, and you will find that the NFT industry is not only quite exciting but is building a diverse and globalized community.