The cryptocurrency world is often featured in headlines, and one aspect of this new technology is the rise of non-fungible tokens or NFTs. In 2021, the Collins Dictionary actually made NFT its Word of the Year. But what is it, and how can they be used?
What is NFT?
If you’ve ever wondered what is NFT, let’s delve into it a little deeper. Non-fungible tokens, or NFTs, are a digital asset which is sold, traded and purchased online. Think of a work of art; an NFT is basically a representation of that real-world object but in digital form.
In comparison, a fungible asset is something like currency, bonds or bitcoin. These assets are traded and exchanged for a like-for-like value. Whereas in the case of non-fungible assets, they can’t be replaced or modified.
Much like a painting or sculpture, for example, an NFT is unique. As there’s only one of them, it gets a digital signature at the point of creation, which proves its authenticity, much like an artist’s signature. This digital token is stored on the blockchain and cannot be altered. It essentially stays in existence forever and features details on the date of creation, value, sale details and more.
Why are NFTs used?
NFTs are used in several ways. First, it gives creators and artists a way to monetize their work. Whether this is art, videos, collectables or even GIFs, practically anything can be converted into an NFT.
But how do artists sell their work? Traditionally, creative works are sold via galleries and auction platforms. But this feels old hat compared to the world of digital marketplaces. Creators can sell their artwork digitally via an NFT and, in some cases, receive a commission every time it moves into someone else’s collection. But, of course, in the real world, this doesn’t happen. Once it’s sold, it’s sold.
NFTs can also be used to protect an artist’s work. Once an NFT is created, it is given a unique digital signature. This proves the origin of the work and cannot be changed. So, if a creator experiences digital theft, then there is evidence to showcase the actual creator of the work.
Another way NFTs are used is in collections. Much like tangible collectables, NFTs are proving a popular investment for many people. Individuals can collect different types of digital assets and keep them stored for the future or NFTs can be bought and sold similar to other investments.
Individuals aren’t the only ones jumping on NFTs. Organizations and brands are selling NFTs featuring unique works and one-off items only available as digital assets. Other companies are using this technology to raise money for charity.
Where can I find non-fungible tokens?
If you want to start an NFT collection, you’ll need to purchase cryptocurrency and visit an NFT marketplace to check out the latest digital assets. There are several places to buy and trade NFTs, so do your research to find the best platform for you.
