What is an NFT? Non-Fungible Tokens Explained
What Is an NFT?
An NFT is a digital asset that represents real-world objects like art, music, in-game items and videos.NFT works on blockchain as it gives users complete ownership of a digital asset. For instance, if you’re a sketch artist, and if you convert your digital asset to an NFT, what you get is proof of ownership, powered by Blockchain.
Cryptocurrency is a currency and is fungible, meaning that it is interchangeable. For instance, if you hold one crypto token, say one Ethereum, the next Ethereum that you hold will also be of the same value. But NFTs are non-fungible, that means the value of one NFT is not equal to another. Every art is different from other, making it non fungible, and unique.
How Is an NFT Different from Cryptocurrency?
Cryptocurrency is a currency and is fungible, meaning that it is interchangeable. For instance, if you hold one crypto token, say one Ethereum, the next Ethereum that you hold will also be of the same value. But NFTs are non-fungible, that means the value of one NFT is not equal to another.
Physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value — one dollar is always worth another dollar; one Bitcoin is always equal to another Bitcoin. Crypto’s fungibility makes it a trusted means of conducting transactions on the blockchain.
How Does an NFT Work?
NFTs exist on a blockchain, which is a distributed public ledger that records transactions. You’re probably most familiar with blockchain as the underlying process that makes cryptocurrencies possible.
Who can buy NFTs?
Anyone who holds a cryptocurrency wallet can buy an NFT. That is the only prerequisite to purchase an NFT. You don’t need any KYC documents to purchase an art. All you need is a cryptocurrency wallet powered by Metamask, and an NFT marketplace where you can buy and sell NFTs including OpenSea, Rarible, and SuperRare.