You see the world around you is evolving fast and every day there is something new that doesn’t make sense. You try to wrap your head around it, and just when you are about to understand, something new emerges in the market. There are millions of other people who are going through the same.
One of the most commonly used words on the internet these days is NFT. When you tell people what they are and how much NFTs can be worth, they are bamboozled and often end up thinking that such a thing is not possible. However, you can rest assured NFTs are real and the market is only going to grow with time.
Let’s understand what they are.
Understanding the Concept of NFTs
Someone explained really well on the internet by calling them receipts—that’s exactly what they are. However, to make it simple to understand, you could say that they are receipts with a bar code or proper code on them. Each receipt has a unique code that makes that receipt different from every other receipt out there. What makes that code special is that it tells you what the origins of the receipt are, who received the receipt, and when this transaction took place. This piece of information cannot be copied and forged because it is stored on the Blockchain.
A Detailed Understanding of NFTs
Now, let’s get to the full form of NFTs, which is Non-fungible tokens. Non-fungible means they can’t be exchanged with each other for the same value. You could give your friend $1 and get their $1 and that won’t make a difference. However, with non-fungible tokens, you can’t do that.
Let’s take an example to understand the concept. Let’s say you have the pair of shoes that Michael Jordan wore at an important game. Let’s say your friend has a pair of the same shoes that they bought from a store nearby. Now, do you think the pair they have is worth the same as the pair you have? You couldn’t trade the pair you have for the one they have because they are non-fungible.
Now, apply the same concept to the digital world and you will start understanding what NFTs really are. Let’s say an artist draws a portrait, takes a picture of that portrait, and then converts it into an NFT (call it a unique code). You buy that NFT from that artist and now you own that “unique” code that only you have.
Let’s say your friend comes to your house, takes a picture of the picture of portrait you have, and tries to sell it on the market under the guise that they have the real picture. However, the NFT they have will be different from the unique one you have. That NFT will clearly tell people on the network that they are selling a fake while you own the real one.
The Uses of NFTs
An artist could sell their portrait with a unique code and make sure they keep the ownership of that portrait. A music artist might release a song, convert it into an NFT, and now make a royalty on this song every time their song moves from one person to another.
The unique code of the NFT is traceable, which will show the artist how many copies of the song are being sold. This means you are throwing forgery, piracy, and counterfeits out of the window. At the same time, it will help users claim ownership of a unique and rare piece that no one else has.
NFTs are always based on a particular standard. It should be clear to you from Ethereum news that the first NFT came because of this blockchain. That’s the reason Ethereum is sometimes considered even more important than Bitcoin. However, you never know that the creation of the first NFT on Ethereum might itself become an NFT someday and sell for millions of dollars to the supporters of crypto.