During this read, we’ll refer to non-fungible tokens as NFTs.
NFTs can be pieces of art. They can be interactive games. They can include royalty-producing smart contracts. They can give owners special access to their favorite franchise or other fan club benefits. And they can even be status symbols.
Basically it all suffices to uniqueness, rarity, and specialty. We can easily swap one fiat bill with another, and both will retain exactly the same value. Regular cryptocurrencies like BTC and ETH are fungible; meaning they can be divided into smaller units and can be mutually exchanged for similar assets. For example 1 BTC = 1 BTC and 1 ETH = 1 ETH. They’re fungible after all.
It’s impossible to trade the Mona Lisa for its equivalent. Whereas NFTs as the name suggests they are non-fungible meaning they are indivisible, unique, and can’t be replaced with something else.
Regarding smart contracts, NFTs can be structured to pay their creators royalties every time ownership exchanges hands. This is a feature that makes sense. As a piece of art increases in value and trades in any auction, the artist will receive a percentage of every sale. In that way, great work is rewarded, and it creates future income for the artist. And other potential uses for NFTs even tie them to real-world objects. As mentioned above, someone could gain a “ticket” to attend an exclusive event or receive other tangible benefits like fan merchandise by owning an NFT.
This means that digital media is redefined and begins its journey on a blockchain; a decentralized digital ledger that is incorruptible, unfalsifiable, and indestructible. NFTs are special tokens, an NFT is a unit of data stored on the blockchain that is considered unique in value. Each digital assets are unique in its own way. So each NFT has specific value based on its unique attributes and traits, hence it cannot be mutually exchanged for something of equal value.
NFTs can be a digital representation of anything, although recently they are largely used to prove the ownership and confirm the scarcity and rarity of a digital intangible assets such as screenshot of tweets, GIFs, video games, sports highlights, etc.
Alethea AI sold an “intelligent” NFT named Alice. She’s been designed with a personality and can answer questions or hold a conversation. We can imagine this sort of NFT serving a number of uses, even earning income on their owner’s behalf by promoting products or enabling business transactions with potential customers.
NFT marketplaces play a fundamental role in connecting buyers and sellers. Some even go a step further by providing extra tools to assist in creating (minting) your own NFTs in a matter of minutes.
List of NFT marketplaces:
We can envision time-based NFTs, season-based NFTs, usage-based NFTs that change if we don’t actually use or view them, dynamic NFTs that evolve, and yes, even ephemeral NFTs that only last a certain period of time. After all, rarity is one of the things that make collectibles and art so valuable.
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