The term NFT has been floating around for a while now. It gets searched over 2 million times per month. Like many, you’re probably wondering what does it mean.
According to Robyn Conti, John Schmidt
An NFT is a digital asset that represents real-world objects like art, music, in-game items and videos. They are bought and sold online, frequently with cryptocurrency, and they are generally encoded with the same underlying software as many cryptos.
Although they’ve been around since 2014, NFTs are gaining notoriety now because they are becoming an increasingly popular way to buy and sell digital artwork. A staggering $174 million has been spent on NFTs since November 2017.
NFTs are also generally one of a kind, or at least one of a very limited run, and have unique identifying codes. “Essentially, NFTs create digital scarcity,” says Arry Yu, chair of the Washington Technology Industry Association Cascadia Blockchain Council and managing director of Yellow Umbrella Ventures.
This stands in stark contrast to most digital creations, which are almost always infinite in supply. Hypothetically, cutting off the supply should raise the value of a given asset, assuming it’s in demand.
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Still Not So Clear?
Alright, Let’s say you’re royalty. There is a ring in your family that has been passed down for generations. It has a few marks and your great, great, great, great, great granddad, who was a jeweler engraved his initials in it. The history associated with that ring, and your grandpa’s work to engrave his initial is unique. That is nonfungible (cannot be replaced). If you were to lose that ring or get another, it would not be the same.
Token (T) simply represents the ring/asset. Now that you’re old, you would like to hand over the rights to your son. The ring can only have one owner at a time. In order to change ownership, there has to be a family meeting with other members present(going on the blockchain/market for crypto). They all have to verify that you are of a sound mind, that it is indeed the ring, and that your son is deem fit to accept and keep the ring(computers on the blockchain verifying and processing the transaction). Once the meeting is over, all family members are aware of the new owner (entering details into the ledger for the public record).
The Future of NFTs
We’re living in a digital age. Our likes and preferences are not exactly the same as the generations before us. We value things differently. Now, will NFTs replace fine physical art or family heirloom? I am not sure, at least not for the near future.
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