What are non-fungible tokens (NFTs)?
NFT, or non-fungible tokens, have numerous fields of application: games, art, and even agriculture. But what exactly are they?
A NFT (non-fungible token) is a special cryptographically generated token that uses blockchain technology (such as Bitcoin) to be linked to a unique digital asset, which cannot be replicated (copies of which cannot be made).
Non-fungible tokens differ from popular cryptocurrencies such as Ether (ETH), Bitcoin (BTC) and Monero (XMR), which are fungible; for example, you can exchange a Bitcoin for any other Bitcoin.
What is fungibility?
Fungibility refers to the ability of an asset to be exchanged for a similar asset, without sacrificing its value. Fungibility also defines the characteristics of an asset, such as divisibility and value. For example, a 10 euro banknote is identical to another 10 euro banknote in terms of value. Therefore, when you borrow a 10 euro note from someone, you do not have to return the exact same note, as another 10 euro note has the exact same value. Even in the cryptocurrency industry, one Bitcoin has the same value as any other Bitcoin.
However, the game changes with non-fungible tokens. An NFT cryptographic token has a distinct value from any other similar token. Individual characteristics determine their uniqueness, so they are non-fungible, just like real-world assets such as precious stones, works of art and luxury collectibles.
NFTs bring a revolution in the world of collecting, allowing us to identify as unique also digital works that, until now, were reproducible indefinitely by definition. Digital art artists have adopted non-fungible tokens to create unique and authentic NFT artworks, just like a “physical” artwork by a famous painter or sculptor.
Data from CryptoArt – an analytics platform focused on cryptocurrencies – indicates that the total volume of NFT-based artwork reached $ 8.2 million in the last month of 2020. This is a significant increase, considering that the volume was only $ 2.6 million a month earlier.
In October 2020, an NFT artwork designer sold his work for $ 131,250, one of the highest values achieved by an NFT digital object. Two months later, a collection of NFT artwork changed hands for $ 777,777.78.
All this is a further application of blockchain technology, the same that allows the operation of cryptocurrencies such as Bitcoin and which is really about to change the world, offering immense business opportunities to those who know how to master it. Here are some texts to understand how to exploit this new possibility.