NFTs explained in plain simple terms
There is a lot going on in the Crypto & Blockchain space.
2021 is the year where a major shift has happened in the way. how we see Cryptos and Blockchain projects
From looking at them with financial use case lens to virtual world perspectives.
It is fair to say that Facebook’s announcement of Meta and its efforts in creating metaverse, similar the once we saw in the movie “Ready Player One” has significantly boosted this shift.
While we haven’t even scratched the surface of the metaverse and its untested applications, NTFs (Non Fungible Tokens) are creating waves in the mainstream art work. Nike, Adidas, NBA, Disney has already started testing the waters of NFTs.
To understand the NFTs technically better we need to understand how blockchain and Web 3.0 works, I will save these topics for another article
But in this article I will take a shot at explain NTFs in plain simple terms.
NFT Stands for Non Fungible Token.
Let’s break it down, and figure out first ,what fungibility is.
By definition: Fungibility is the ability of an asset to be exchanged or substituted with similar asset of the same value.
The opposite of fungibility is the fundamental of the NFTs, meaning you can NOT substitute an asset with a similar asset. This brings up the concept of rarity, anything which is available is less numbers are usually expensive to acquire.
For example the Famous Mono Lisa portrait at Louvre Museum is Non Fungible and there is no other asset which is similar and has the same value.
NFTs are powered by blockchain and can only exist digitally with in a Blockchain meaning each NFT will have an unique address and each time it is transferred between two entities,the transaction will be recorded in a blockchain and can never be altered. The is called immutability, which is one of the fundamentals of blockchain.
If you are an artist or a collector you can make (mint), sell or buy these NFTs where all your transactions will recorded in the blockchain. From whom you bought, for how much you bought it for, there by you can prove the authenticity and ownership of the NFT.
You might be asking by now that you can simple go online and download these images for free. YESSS! You can totally do that but that action is equivalent to buying a Mona Lisa portrait from Amazon which exactly looks the one in Louvre Museum but has almost no value when compared to the real Monalisa Potrait
Remember the untested applications that I mentioned about earlier in Metaverse. Other projects like Decentraland, Sandbox game etc., are working along the same lines where they are creating these virtual worlds in which you can buy land , build virtual real estates and place you NFTs, collectibles etc., since all these virtual world are powered by Blockchains you can only place your NFT in metaverse if you are real owner of that particular NFT or any other collectible.
A simpler explanation would be we buy Fortnite skins to be used in the game, but can not be used in the real world just apply to same logic to NFTs. In fact some games are selling skins and rare items in the form of NFTs.
I hope this articlegave you some understanding of NFTs.
In my future articles I will show how and where you can sell and buy NFTs.
I put a lot of effort in understanding these things and explain them in plain simple terms. I would be really encouraging to me if you consider follow me and clap for me.