NFTs have gained massive popularity in recent time, especially in the digital art and games space. NFTs (Non Fungible Tokens) are the transactional currency of Blockchains. They are used for a wide range of applications, from collectible tokens to coupons and vouchers. Unlike fungible cryptocurrencies, each NFT has a specific function and cannot be exchanged with other NFTs.
What are NFTs?
Non-fungible tokens are unique digital assets, or collectibles, which are created using blockchain. NFTs, also known as Nifties, represent real-world objects like art, music, in-game items and videos. They are bought and sold online, mostly with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos. NFTs are usually bought with cryptocurrency Ether or in dollars and the blockchain keeps a record of transactions. While anyone can view the NFTs, the buyer has the status of being the official owner.
Popular features of NFTs include:
• They are indivisible, meaning that NFTs cannot be divided into smaller denominations, as in Bitcoins.
• Since the NFT data is stored on the blockchain, the tokens cannot be destroyed, removed or replicated.
• Being on the blockchain allows easy tracing of the original owner and eliminates the need for third-party verification.
• NFTs derive their value from the fact that they are scarce. Although NFT developers can create any number of NFTs, they are purposely limited to add value.
Why is NFT gaining popularity?
One purpose of NFTs is that they can be used to trace an object’s digital provenance, allowing a select few to prove ownership. Broadly speaking, it’s a way to create scarcity – albeit artificial – so that you can sell something for higher prices thanks to its scarcity.
They have been presented as a solution that ascertains ownership over an object that can otherwise easily be reproduced. Unlike a traditional painting or sculpture, digital artwork is trivially easy to duplicate – it’s just a matter of downloading a copy. NFTS prove authenticity in the same way that the blockchain ensures a single bitcoin is owned only by one person.
Unlike physical pieces of art which can be broken, lost or destroyed, NFTS cannot be destroyed as they are recorded on a blockchain (a blockchain is an immutable record of transactions) in the same way as cryptocurrency transactions are. Most NFTS use the Ethereum blockchain, but there are others.
NFTs: The future ahead
Unlike bitcoin and other cryptocurrencies, each token of NFT nature is absolutely unique, making it a preferred choice of digital art certification. Since the NFTs provide unique ownership of digital assets like art, music, among other things, reports have claimed that the NFT train is going full steam ahead.
Stay tuned with Realxposure to learn more about NFT’s.