6. What is an NFT token?
Non-fungible token is referred to as an NFT. As of recently, the whole world is talking about them, and the popularity rankings are growing, not only in the cryptocurrency -related community. What are they? How are they created? Why are more and more people and companies interested in them and their issuance?
Will they revolutionize many industries? If you don’t know what: Bored Ape, Beeply, Play to earn are – we invite you to read!
“Non-Fungible Token” (NFT), what does it even mean?
A non-exchangeable good is unique, unrepeatable, and cannot be confused with another thing. Moreover, we cannot split it; it exists in a single copy, and all the information is stored on the Blockchain, so we can verify and know the history of the NFT.
We can perceive the NFT token as a certificate of authenticity of a digital good attached to it, e.g., an image file.
Whereas a digital file is already fungible, e.g., an image, video, or audio can be copied and duplicated, but not the cryptographic token serving as their certificate.
NFT was founded in 2014 but reached its popularity in 2017 with CryptoKitties, Rare Pepes, and CryptoPunks. It is a trend that is growing strongly. Many universities are issuing diplomas in the form of NFT to make them tamper- and forgery-proof. Luxury brands, diamond retailers, and thousands of other companies are using Blockchain to certify their products.
What can you sell or buy as an NFT?
Basically, anything: movies, paintings, texts, or other collectible items. It is not without reason that tokens have gained the most popularity in the gaming industry, by selling and buying unique items, skins, or heroes. As a matter of interest, we will just mention that in 2020, as much as 41% of NFT was used in the gaming industry. Remember, however, that when you buy an NFT product, you only own it; you are not the author. This is a crucial difference that many people fail to remember.
- They eliminate fraud, especially in the eCommerce industry.
- They enable tracking of product data, at every stage of its “life”.
- Furthermore, they facilitate the international sale of digital assets.
- Moreover, they eliminate middlemen.
- NFT transactions are fast, done in real time.
- Not everyone can navigate the digital world and use decentralized applications.
- NFT technology is only a few years old – not everyone trusts it.
- Even though NFT represents assets in the real world, guaranteeing ownership of an asset can be difficult.
- They are not clearly regulated.
Over the past two years, we have seen a large increase in interest in NFT tokens. This ecosystem will continue to grow. People as well as companies will implement this technology, and the opportunities are enormous.
Summary and conclusions:
- NFT is a non-exchangeable token. In the literature you will also find the terms “exceptional”, “impossible to counterfeit”, “unique”.
- A token is a mark that identifies / confirms authenticity. As we mentioned earlier, it is a digital certificate.
- They are related to cryptocurrencies because they are based on blockchain technology. The same one that Bitcoin was built on.
- Any physical item can be equipped with an NFT, which unequivocally gives us confidence that we are not dealing with a fake. Therefore, they can be safely traded.
- NFTs have their five minutes. Recently, their popularity has been constantly growing. We are seeing them more and more often in everyday aspects of our lives.
- The process of making NFTs is relatively uncomplicated, even for a layman. It is best to take your first steps into the Ethereum ecosystem.
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