It is hard to explain but for some reason people buy visual representations of poop or rocks for thousands and millions of dollars. We talk about digital assets, not tangible, material goods so to actually see such an asset, one has to either imagine it or look at their PC or phone screen.
We have accidentally delivered the NFT definition just now but let’s be more specific on that:
NFTs are unique digital assets, recorded on a blockchain.
Each of them is one-of-a-kind: even if there are multiple instances of the same asset, there are sequence numbers attached to them to distinguish between the two.
Like everything on blockchain, each NFT has an addresses associated with its owner.
We have seen a lot of the so-called “digital assets” emerge in the last decade, so let’s start with a proper description first.
What does NFT mean
The acronym itself stands for “non-fungible token”. Great, now you face two unfamiliar notions instead of one (if you are not versed in crypto yet). What is fungibility? What is a token?
What does NFT mean: it is irreplaceable
Each NTF, as we said above, is one-of-a-kind. For example, when an artist issues a digital painting, they can choose to make multiple identical copies, yet each copy will come with a serial number.
Fungible tokens can be exchanged for one another and no one will ever notice the difference: neither in value nor in appearance. Their supply could be unlimited. They don’t even have the minting dates on them.
By the way, it gives modern artists more possibilities to earn compared to their colleagues from, say, the 2000s: one can issue several copies of an art piece, and anyone across the world can buy one. The pieces issued in small numbers are still scarce and, therefore, valuable. Their digital nature enables nearly-instant delivery. The authenticity of each piece is easily verifiable.
What does NFT mean: why not non-fungible coins?
Coins are comparable to fungible tokens but you still can’t put an equals sign between them. As we wrote a while ago, tokens wildly vary in utility and have a specific application while coins are exclusively the units of wealth.
NFTs can represent any data. When it comes to art, there is no point asking, ‘What does NFT mean?’ referring to a particular NFT. They just represent some factual reality or idea in a digital form and cost whatever people are willing to pay for them at the moment.
Both coins and tokens are stored on blockchain. But why blockchain, you might ask? Isn’t a sticker I send over Telegram digital and unique in a certain way?
Blockchain gives unique properties to digital objects:
- Anyone can trace its movements in time right to the point of creation.
- Decentralized storage gives them a sort of digital immortality and immutability, so it turns out that they are more durable than material objects. One user cannot erase such an object from existence (although, in theory, 50% of all the network users can, which is an extremely, extremely hard endeavor in practice).
We are not saying that there are no attempts to link NFTs and material valuables though. Nike is in the avant-garde in this regard with the introduction of crypto-sneakers.
What is NFT crypto in examples
We will give a few existing and possible examples of NFTs in various niches to answer the question, ‘What is NFT?’ from another angle.
What is NFT crypto: memes, art, game assets
The NFT boom is mostly associated with art and games.
By art we mean all art, not only mediocre memes that dominate the market. Poetry, for example, can be tokenized (and yes, there is a lot of low-grade poetry too): Etherpoems is an interesting pick. See the variety of all available NFTs at Foundation, OpenSea, or Rarible for yourself: they have thoughts, animations, short videos…
The named platforms all operate on the Ethereum blockchain and are integrated with one another to some extent.
Ethereum is the second largest cryptocurrency in the world by market capitalization and boasts a plethora of useful tools (like Metamask wallet browser extension), large audience, and large pool of experienced blockchain developers; no wonder that creators and art collectors rush there headlong.
Ethereum is giant so it struggles with network congestion and high transaction fees. The promised Ethereum 2.0 upgrade might turn the tables, and meanwhile other, non-Ethereum NFT platforms try to gain stable footing and recognition.
Play-to-earn blockchain games brag active NTF trade too. A player can use their asset across all games that are a part of a single multiverse: it is something they have been dreaming about for ages. True ownership and the option to sell out all the acquired assets (that possibly were gained for free) attract more and more players.
Pieces of equipment in Gold Fever, plots of land in Sandbox or My Neighbor Alice, and collectible cards in Splinterlands are just a few examples of NFT game assets.
The other known use-cases include but are not limited to gamification rewards, certificates of participation, proofs of achievements, etc.
What is NFT crypto: futuristic prospects
What can and what cannot be an NFT is only limited by imagination and technological restraints. George Church, a Harvard geneticist, thought that tokenizing his DNA sequence was a great idea. Indeed, if the storage keeps this data long enough, the scientist might be cloned one day.
The reality of Ready Player One is only this far away from us. Add more bandwidth, computing power, and storage and you’re all set to build a vast shared metaverse that hosts dozens of games.
We did our best to describe and explain NTFs and now you can confidently answer the question, what is NTF, yourself should anyone ask.
The NFT definition is not all we got for you. Stay tuned for more articles as we have a detailed NTF art description and a guide on how to create your own non-fungible tokens!