NFTs: What are They?

Introduction

Let’s begin with “Fungible”

“Fungible” is one of the major words that confuse people when it comes to learning about NFTs. But, what does it mean? let’s make it simple for you.

Fungible is an economic term that simply means “Mutually interchangeable.”

Here is a basic example: You can interchange the Dollar for a Pounds Sterling, or a Dollar for your native currency, right? what this means is that both the Dollar and your native currency are Fungible.

So whenever the word fungible comes up to confuse you, replace it in your head with the phrase: Exchangeable piece.

What about a Token?

What is a token? A token is a representation of any digital asset on the Blockchain. This can be anything: Art, movie tickets, food, cars, company equity, money, and any other thing you can think of.

Two Major Types of Token Standards:

• Fungible Tokens
• Non-Fungible Tokens

What are Fungible Tokens?

Fungible simply means mutually interchangeable tokens. For example, you can exchange a Bitcoin (BTC) for an Ether (ETH), or BNB for a USD.

Fungible tokens are constant, and not necessarily unique.

1BTC for example is always of the same value no matter the location or geography.

Here, you can also read about the major difference between fungible and non-fungible tokens.

Now let’s dive into Non-Fungible Tokens (NFTs), and how you can make the best out of them.

Non-Fungible Tokens (NFTs)

NFTs are unique non-exchangeable tokens built on the Blockchain that proves genuine ownership of digital assets.

NFTs can be anything: for example, music, art, game items, photographs, Tickets, membership cards, and Fashion accessories, as long as they are unique and are not replaceable.

In essence, any intellectual property item can be made an NFT. Just like a Da Vinci, or a Basquiat painting, you can not replace NFTs because they are unique. You can only pass on the ownership. The role of the blockchain in all of these is to keep an accurate record of the ownership and the transaction.  

NFTs have become an integral part of the blockchain ecosystem. Projects built around Web3, Metaverse, and Defi have continued to use NFTs to power their communities and incentivize users.

NFTs mirror the economics of the traditional art world, using digital art and the blockchain. But, it opened up the tight-knit art circle to young people and those who may not have had an interest in the traditional art world.

Beyond the hype, NFTs presented an easy way to collect, own and authenticate digital assets.

Who Can Own an NFT?

NFTs can be created, owned, and minted by anyone. You can be a collector, an artist, or an enthusiast.

Where Can I Buy NFTs?

 There are marketplaces dedicated to NFTs. And these marketplaces vary by blockchain. A few of these marketplaces are Opensea, Nifty Gateway, Rarible, Digital Eyes, and many others. To know more about these marketplaces, and which will work best for you, you can read about them here. 

What’s the Difference between an NFT and a Crypto?

The major difference between an Nft and crypto lies in fungibility. NFTs are non-fungible while Cryptocurrencies are fungible tokens. 

This is to say that Cryptocurrencies are exchangeable while NFTs cannot be interchanged. You can swap one Crypto token for another, but you cannot do the same for NFTs. 

You can check out NFT marketplaces here, and how to buy and sell NFTs.