When people talk about owning an NFT, they often describe it in terms of owning an original painting. However, there might be millions of copies of that painting hanging in dorm rooms around the world. But if you own the associated NFT, then you own the original piece digitally signed by the creator.
Fungible & Non-Fungible explained
Non Fungible Tokens or NFTs are tokens that contain an item’s ownership and copyright information. You can buy NFTs in art, music, sports trading cards, virtual land, and in-game collectibles. You can even buy NFTs for real-life collectibles, but they are less common.
In contrast, a fungible token is a token that another identical token can easily replace. One example would be cryptocurrency tokens. One Bitcoin is, for all intents and purposes, identical to another Bitcoin.
So when you buy NFTs, What Are You Actually Buying?
When you buy an NFT from one of the many NFT marketplaces out there, you’re paying for a token that represents a unique item. In other words, you’re paying for an extremely small digital record (likely only a few bytes in size, which often contains a URL or a serial number) that’s sent to your address on the blockchain.
Having ownership of this token means you can prove that you own a specific item and that the item you own is authentic—kind of like a certificate of authenticity. If you own that NFT, nobody else can own it, unless you sell (or give) it to them.
Owning an NFT is analogous to having possession of the deeds to a house. The deeds are a record of ownership, not the house itself. Similarly, an NFT is a record of ownership or authenticity of an asset, not the asset itself.
Logic behind Buying NFTs
When you buy an NFT, you are paying for a token that represents an asset. NFTs are purchased for the attached value of importance rather than the need to own the actual asset. Although many collectors claim interest for future resale value, it has been observed that the idea of owning collectibles is more about the sentimental thrill than logical necessity.
Owning an NFT by itself does not automatically grant you any rights to its intellectual property at all. Many NFTs come with additional terms that explain in more detail what you can do with your new purchase. So it’s important to fully understand the terms of every NFT you purchase, as they can vary wildly from one to another.