What is NFT?

Samuel Monse

Samuel Monse

16.11.2022
to read
5/5 - (3 голоса)

Elementary

Theory

With NFT you can sell almost any virtual object - images, music, texts, 3D models. But most often we are talking about digital art objects.

Art that exists only digitally on servers can make a fortune. What is NFT and why do people pay millions of dollars for air?

With NFT you can sell almost any virtual object - images, music, texts, 3D models. But most often we are talking about digital art objects.

NFT (non-fungible tokens) is a technology that assigns ownership of a digital object to a single user and confirms the uniqueness of digital property. The concept comes from the cryptocurrency world and works on blockchain: a technology that records data in digital blocks in a specific order. Blockchain information cannot be deleted or changed. The blocks are stored on different devices around the world, not on a single server. It is virtually impossible to hack a digital object on a blockchain.

A token is a blockchain element or digital record that can be compared to securities or stocks in the real world. There are interchangeable tokens, partially interchangeable tokens and non-fungible tokens (NFT token).

Let's look at some examples.

Interchangeable token

If you borrow a banknote of 100 dollars and then give the same one back, there won't be any difference. Although the bills are different (each with its own number), they are equivalent and replace each other. In the digital world, cryptocurrency works the same way. Any bitcoin is equal to one because each has an interchangeable token.

A partially interchangeable token

If you buy a train ticket, it's not unique: other passengers have the same ticket that can be exchanged. But if you take a train ticket with a specific seat, there can't be a second one. In the digital world, this ticket would combine the characteristics of an interchangeable token (passengers can exchange tickets for the same train and still get to their destination) and a non-interchangeable one, because a specific seat is specified, which is unique to the train. So a train ticket with a specific seat specified would get a partially interchangeable token.

Non-fungible token (NFT)

If you buy a painting that is sold as a single copy, you can't replace it with a copy-it's another work of art with its own characteristics. When such a work exists only in the digital world, the object is assigned a non-fungible token (NFT).

***An example of an NFT that has conquered the world is the game CryptoKitties. Here you buy digital pets with a unique token. NFT crypto cats are bred - crossed and get a new kitten. The blockchain code here works like a genetic code: each new kitty will turn out to be unique and one-of-a-kind.

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