NFT: Non-Fungible Tokens
NFTs, also known as Non-Fungible Tokens, are a type of token that represents digital assets that you can buy or sell. Because of its unique property within the category, an NFT cannot be replaced or interchanged.
For further understanding, let’s consider an example.
Imagine that a person received a book as a present and read it over the course of a few days. If he bought another copy today from an internet retailer and another tomorrow from a book market, he would have two identical books, indicating that this book can be replaced at any time, making it a replaceable asset.
Now that he has completed reading this book, what if someone claims that this book is “UNIQUE”? not because someone just finished reading that book. The book will have highlights and a few random scribbles that the person might have made while reading. This means that this book cannot be replaced because there is only one type existing in this world and it has the readers’ annotations and highlights, making it impossible to obtain another copy!!
NFTs can be anything. They can be a drawing or music or a picture. Everything will have authentic certificates and ownership proofs so that it cannot be forged or otherwise manipulated.
How does NFT work?
The majority of NFTs are a part of the Ethereum Blockchain. What is a blockchain? Suppose someone is buying a book from a seller; to be specific, let it cost 100 rupees. The person buys the book from the seller. He makes an online payment and the seller gets his 100 rupees.
NFTs work by creating a blockchain-based digital certificate for digital collectibles including music, art, drawings, etc. which gives it a unique identity. The programming language and scripts used by NFTs are the same as those used by cryptocurrencies such as bitcoin, etc.
This transaction was easy, but what happened to this transaction?
When he entered the amount and other credentials, in milliseconds, the bank just checked his account to see whether he had 100 rupees. If he had 100 rupees in his account, the bank approved this transaction, and then the 100 rupees came to the seller’s account and the bank, and this entire transaction was recorded. All this happened at a bank level, and the bank is keeping a record of every transaction that is happening. This is called a “centralized way of banking”. Money, as such, is unlimited. The value of the money you have can be reduced at any point in time because lots of money is being printed or something like demonetization has happened. Some notes themselves are going to be disregarded if someone decides to void them overnight. That is what centralization is.
Can we make this centralized world into a decentralized world? This means when he gave the seller 100 rupees to buy the book, a ledger was created and it belongs to the bank. Can this ledger be owned publicly? The bank is not the owner; the public or an institution is the owner, and this is the concept of Blockchain. Someone just checked if he has those 100 tokens when he gave you 100 rupees or say 100 tokens,( which is just the name for currency in the blockchain), and that someone is not just one person but theoretically the entire world.
Thousands of computers all over the world will check whether the buyer has 100 tokens or not. If he doesn’t, then the transaction will be disapproved and then it will be recorded forever and ever and nobody will be able to edit or delete this in any way. This is the entire concept of BLOCKCHAIN
The Importance Of NFT
Ownership of a digital item can be proven very easily. This is because they are stored on a specific blockchain network. Every NFT has its unique identification features and ownership certificates that prove the ownership so that the owner is protected from getting counterfeit digital assets.
NFTs can remove intermediaries, thus making it easy for artists and creators to reach their audiences. NFTs create new markets and also make transactions easier, which makes life easier.
Recently, the NFT version of the first-ever tweets on Twitter by Jack Dorsey saying “just setting up my Twitter” was sold for $2.9 million, making it the most expensive piece of the digital asset sold.
Future and Current Stand of NFT
NFTs are regarded as a fantastic investment vehicle by a huge number of people. Research indicates that NFTs have not been on track. Therefore, it is advised against purchasing NFT for investment purposes, but possessing NFT or selling NFT is something one should experience. It’s a new world, much like when the internet first entered our lives. At first, it wasn’t well received by the public, but look at where it is now: we live in the 5G era. According to statistics, NFT will undoubtedly take over the globe in the same way that the internet did. Therefore, if it excites one to experience a new form of technology, then NFTs are highly recommended.
It’s crucial to comprehend NFT and Blockchain concepts. Blockchain is claimed to transform the world since it provides a means for recording ownership or validity of items without any room for disagreement. Property disputes and authentic degree arguments will go away as technology now, has a way through which you can define 100 % ownership forever and ever!