What is an NFT?
NFT stands for “Non-fungible token” a type of authenticity certificate that certifies the ownership of a kind piece of a digital asset. A unique digital asset that contains data ownership information recorded on a blockchain. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files that exist online. NFTs are like physical collector’s items but in digital form.
What is Non-fungible token
The non-fungible token is a cryptographic token that represents, in digital form, products and services from the physical or digital world. “Non-fungibility” is something that cannot be fractioned or exchanged which means cannot be traded with an identical currency. Fiat currencies like the U.S. dollar or Cryptocurrencies like bitcoin are considered as “fungible” which means something that can be interchangeable, exchanged for another identical or of the same value. Therefore, Non-fungible tokens are unique and singular.
How Does an NFT Work?
NFTs exist as a digital signature registered in the Blockchain, which is a distributed public ledger that records transactions. With the use of cryptocurrencies, the same Blockchain technology registers and validates it. Digital arts are linked with these tokens, identifying them as original and unique art. It can be an image, a GIF, music, or other types of digital files.
A digital asset becomes an NFT when it is registered by blockchain technology, the process called “minting” and “tokenize”. By buying an NFT, a person gets exclusive ownership rights that no one else can claim which means NFTs can have only one owner at a time.
Generally, NFTs are typically held on the Ethereum blockchain, but other blockchains support them as well, such as Solana, Cardano, and Bince Smart Chain, and many more.
Why do people buy NFT?
There’s a lot of reason why people buy NFT. NFTs are mainly used in the collectible goods segment. As mentioned above, NFTs are basically like a physical collector’s item. Physical art has long been used by people to store value. For Investors, this is just a more modern approach to investing.
Brief reasons why people buy NFT:
- They appreciate the art.
- For collecting purposes.
- For-Profit, trading, buy and sell.
- To support their favorite artists.