By now you’ve probably heard of NFTs – usually because one of your friends or relatives has thrown the term out at a gathering – or you read headlines about some lofty price valuations of some NFTs of 8-bit designs or bored looking apes. But what are NFTs exactly?
Let’s start with the acronym: NFT. Which stand for Non-Fungible Token. Fungible assets are able to be exchanged for another asset, such as one cryptocurrency exchanged for another. With NFTs the exchange is not possible, because there is no equivelancy for that asset – and that’s how NFTs can get lofty valuation – because their value, like art, is determined by what the market will pay.
NFTs are assets and meta data that are minted to the blockchain – their values are immutable – meaning as long as the blockchain exists, so does the ledger entry representing the NFT. NFTs can be any digital asset. We’ve mainly seen images and video up to now, but if something is a digital asset or file, it can be minted to the blockchain as an NFT. Once you purchase an NFT, it is transferred to a digital wallet (there are some specifics about digital wallets that are required for you to be able to accept NFTs in them, we’ll cover that in another story). From your digital wallet you can view, send or sell any of your NFTs.
NFTs represent the new landscape of digital goods – and we think they are going to be big. In the end it won’t be just art, video or music, it could be your mortgage documents, insurance, lottery tickets… even your driver’s license and voting record! Again, the main thing is that it proves your ownership, so wherever ownership is one of the key parts of the digital file, the minting on the blockchain makes perfect sense.