NFTs explained In 2 minutes
An NFT token (nonfungible token), is a digital certificate that guarantees the authenticity and gives exclusive rights to its holder. This idea is a result of the cryptocurrency world.
Non-fungible tokens are not able to be replaced, duplicated, or substituted. This system can be used to secure rights to unique objects such as a work or art, piece of real property, or digital artifacts from computer games.
Every record in the digital blockchain is a token is a record in the digital ledger. All tokens or records in an open blockchain can be viewed as equal, fungible coins with the same monetary denomination. Cryptocurrencies are based on the concept of fungibility. This means that a bitcoin can be replaced easily by another bitcoin without affecting the overall portfolio value or position. Any bitcoin is the exact same as any other bitcoin.
The Non Fungible Token technology (NFT), however, is a game-changer and works in a completely new way. Non-fungible tokens are digital coins that can't be replaced with another token, without changing its value or essence.
NFTs, much like cryptocurrency, are created on the blockchain. The blockchain acts as a recorder for all transactions. The blockchain ensures that non-fungible tokens are authenticated. The blockchain guarantees that digital items (e.g. The person who mints the NFT actually owns the digital item (e.g. This system allows anyone to check the authenticity and historical history of any NFT via the blockchain.
The NFT token is essentially a purchase of a certificate that can be used to create a work or other physical item. The NFT item does not travel anywhere. It is permanently stored on the InterPlanetary File System, which is a peer to peer file storage network. The NFT (or certificate) is essentially a string of codes that confirms that the token's owner actually owns the object. An NFT token can be thought of as a painting that is owned by a gallery, museum or individual. However, the audience might still view it in a catalog, exhibition or catalogue. Even if someone downloads an image of this painting from NFT, they still own the rights to the original piece of art.
NFT tokens can be sold on online marketplaces similar to Amazon, except that all payments are made using cryptocurrencies and are transparently registered on blockchain. These NFT marketplaces are where NFT creators can sell their creations (e.g. OpenSea, Solsea, Rarible etc.) Wait for buyers to offer.
NFT technology was initially developed in 2017 based upon Ethereum smart contracts. However, smart contracts that are based on other cryptocurrency such as Solana have been expanded to include NFT technology.
Banksy's 2007 black-and-white drawing Morons was the first piece of art to be made into an NFT token. Injective Labs, a company that provides decentralised financial solutions, purchased the painting and burned it. They then created an NFT token, a virtual asset linked to the digital image of the original piece of art.
DJ 3LAU was first to convert his album into NFT. The album was limited edition and sold for $11.6 million.
Grimes, a well-known singer and ex-girlfriend of Elon Musk sold 400 NFT tokens in March 2021. These tokens were linked to four drawings that she and her brother had created, grossing Grimes $5.8million.
NFT, in general, is a way for creatives and entrepreneurs to monetize their talents and expand their audiences. Artists can sell their art digitally by using NFTs because they eliminate the logistical problems of shipping and receiving physical paintings.
We will discuss AI Art NFTs on our platform in our next post. This is a new trend worth your attention.