What are Non Fungible Tokens (NFTs)? Know about their significance and usage here

Non Fungible Token is one of its kind asset and is widely in news these days after a painting was sold for 69 million US dollars worth NFT. Know about the working, significance and use of NFT here
Created On: Mar 18, 2021 17:18 IST
Modified On: Mar 18, 2021 17:52 IST
What is an NFT
What is an NFT

Non Fungible Tokens (NFTs): Why in News?

Recently a painting has been sold for 69 million dollars but in the form of a Non Fungible Token. The painting has been bought by Meta Kovan.  He would get a token in place of the money he spent. Take a look at the painting bought by MetaKovan below.

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What is a NFT?

  1. It is a class of cryptocurrency that has no standard value but a unique value that is provided for the commodity exchanged against it. 
  2. NFT can be understood as a digital file whose unique identity and ownership are verified on a blockchain. 
  3. The blockchain is a kind of a public ledger on which anyone can verify the authenticity of a NFT and check its ownership. 

  4. These are created by uploading files and are not mutually interchangeable as each one has a unique value. 
  5. Non-fungible means that something is unique and cannot be replaced with something else. 
  6. As for example, a bitcoin is fungible, that is it trades one for another bitcoin. One has exactly the same thing for. A one-of-a-kind trading card, however, is non-fungible. If you traded it for a different card, you would have something completely different.

Key Facts:

  1. NFT is one of a kind asset can be bought and sold similar to any other piece of property
  2. They however have no tangible form and exist in form of certificates only
  3. NFT can not be broken down into small values and unlike most currencies cannot be exchanged for an equal value
  4. The NFTs have unique value and they cannot be duplicated
  5. NFTs can always be traced back to their original user/supplier
  6. The value of NFTs increased from 66 million dollars to 250 million $ over the past year

Working of NFT:

Most Non Fungible Tokens are part of the Ethereum blockchain. Ethereum happens to be a cryptocurrency similar to bitcoin or dogecoin. However, its blockchain supports the NFTs. These also store much extra information which is why they work differently from an ETH coin

What is worth noting that other blockchains can implement their own versions of NFTs. The tokens can be anything digital- this means it includes drawings, music but a lot of the current excitement is around using the technology to sell digital art

Various Examples of NFT exchange:

National Basketball Association’s Top Shot platform- enthusiasts can buy collectible NFTs in the form of video highlights of moments from games.

NFTs have the right to be patches of land in virtual world environments. 

It can be an exclusive use of a cryptocurrency wallet name

Recently Twitter owner Jack Dorsey announced the auction for his first ever tweet  “just setting up my twttr” which would end on March 21.

Read| All about Bitcoin ATMs and their use here

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