A non-fungible token (NFT) is a non-interchangeable unit of data stored on a blockchain, a form of digital ledger.
Types of NFT data units may be associated with digital files such as photos, videos, and audio. Because each token is uniquely identifiable, NFTs differ from blockchain cryptocurrencies, such as Bitcoin.
NFT ledgers claim to provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. NFTs do not restrict the sharing or copying of the underlying digital files and do not prevent the creation of NFTs with identical associated files.
In simple terms, a fungible good is an item that is mutually interchangeable with another. Money is a good example.
A $100 bill is worth the same as other $100 bills (or even two $50 bills). Despite minor distinctions such as serial numbers and issue dates, paper money is considered fungible as they are interchangeable and facilitate transactions in our daily lives. On the other hand, vehicles, art, and properties are examples of non-fungible items that are unique and not interchangeable with one another.
Think of two houses located next to each other-they may reside within the same neighborhood, share the same property developer, and even look completely identical from the outside, but they are technically not similar nor interchangeable.
Their decor and interior layout may be different. One of them could be that much closer to a high-traffic train station, which makes
it marginally more valuable than the other. Simply put, unlike two $100 bills, these two houses do not share the same intrinsic value and thus are not mutually interchangeable, making them non- fungible.
2. Unique -Trade able on marketplaces -Used in games,collectibles,art pieces, intellectual property
3.Non-divisible -Cannot be divided into parts -Generally illiquid and is difficult to sell instantly.
HISTORY OF NFTS
Quantum, an NFT minted in 2014 by New York artist Kevin McCoy on the Namecoin blockchain is often considered the first NFT in history.
However, while it is one of the oldest, it is not technically the first NFT in existence. Quantum NFT The first NFT’s can be traced back to Colored Coins, designed on the Bitcoin network back in 2012.2 Colored Coins was an experimental project designed to explore the idea of Non-Fungible Tokens.
How Big is the NFT Sector?
The NFT industry is rife with innovation. New use cases pop up every day, stretching our imagination of what we can do with NFTS.
Nevertheless, properly categorizing the industry is difficult as there are many different interpretations. For this book, we are focusing on NFTS themselves, i.e., the different use cases for NFTS, not the infrastructure or supplementary segments for NFTS.
Based on this approach, we can broadly categorize the industry into eight segments:
Why do people invest in NFTs
NFT investors may be motivated by speculation, believing that the value of the NFTs they are buying today will increase and that they will be able to sell them for more than they paid. Or they may be inspired by the cultural significance of certain NFTs, looking to own a piece of history.
NFTs have generated billions of dollars and one NFT sold for nearly $70 million.
“People have long used art to store value,” Rodriguez-Fraile told Insider. “Crypto extends easily into digital art. This is just a more modern approach to investing in art and using it like someone would use gold or bitcoin.”
He thinks the NFT boom was accelerated by the pandemic, but ultimately inevitable – a product of the tech boom that younger generations would have eventually driven anyway.
For many artists, especially in the music industry, multi-million dollar sales by 3LAU and Grimes have captured the spotlight and created a sort of gold rush, but for buyers the reasoning is less clear.
NFT seems to be the next big thing in the Crypto currency industry.