Sign up for our Telegram channel for daily crypto news • Follow us on Twitter for new article updates • If you are new to Crypto, check out our Crypto Education section

NFT

« Back to Glossary Index

NFTs (Non-Fungible Tokens) are digital items created through smart contracts that can by stored in a crypto wallet. To understand an NFT, it important first to understand fungibility. Fungibility is essentially how a physical US dollar can be traded one for another. A dollar is fungible, because each dollar carries the same value as another, so it can be exchanged in such a manner.  The same is the case for Bitcoin… as one Bitcoin in a crypto wallet is worth no less than another Bitcoin in a separate crypto wallet. Contrarily, an example of a non-fungible item is a baseball trading card. Since a Babe Ruth rookie card is worth a different value than a Mickey Mantle rookie card, the two can be said to be non-fungible, since they cannot be traded one for the other at an equal value (even though they are both trading cards). This is the way that a non-fungible tokens (NFTs) work.  Any experienceable object or event that is digitizable, can be tokenized on the blockchain. By tokenizing an object, ownership is thus timestamped, secured and memorialized through cryptocurrency on the blockchain. For example, a piece of music produced by an artist can be made into an non-fungible-token through any number of services provider that help users create NFTs. The NFT can then be sold, gifted, shared or traded as the owner sees fit. They can even have multiple owners for the same NFT if the creator likes. The vision of NFTs is a decentralizing of all kinds of digital experiences, which has wide-ranging implications.  A music artist, for example, may be able to bypass the gatekeepers of the music industry and secure a copyright (though the blockchain) by creating an NFT. This would allow the music artist to control the sale and distribution of the NFT in a peer-to-peer fashion directly to the public. Since NFT are powered by smart contracts, NFT are programmable and can have all kinds of unique features, such as royalty payments, expiration dates, etc…. the use cases are endless.

« Back to Glossary Index