Nowadays, many people and artists are surfing the web to find out the meaning of NFT.
NFT definition’s easy as it sounds: Non-fungible tokens. But what does it really mean?
We are covering the basic aspects of creating and selling your NFT art in our article here, but before reading it, we suggest you read this article to understand the real meaning of NFT and get familiar with it.
THE MEANING OF NFT
It’s simple to memorize that NFT means Non-Fungible Token.
But how to go on from there?
“I am interested in that crypto thing that’s super trendy right now… I think they call them NFTs, but what does that mean? And where do I start from?”.
Is that you?
We all got there.
Revealing the meaning of NFT and why an artist should know its advantages it’s easier than it might seem at first glance. Let’s investigate those only important aspects for artists to understand by only slightly touching those technicalities that are not worth comprehending entirely.
First of all, let’s distinguish them from cryptocurrencies.
Like dollars, cryptocurrencies are “fungible,” meaning one bitcoin is always worth the same as any other bitcoin. By contrast, NFTs have unique valuations set by the highest bidder, just like Warhol or Picasso’s art pieces.
You can think of NFTs as a digital certificate of authenticity.
A non-fungible token, or NFT, is a unique certificate intended as crypto coding containing digital information and entirely managed on a blockchain.
A blockchain, by any definition, is a record of crypto transactions. Today there are many Blockchain platforms available, with all different features. But every blockchain is decentralized, meaning countless copies of the same database are maintained by multiple people, called miners or nodes, and managed by an algorithm.
This process will secure that the information is steadily transparent and cannot be forged anyhow by anyone.
Quick note: a miner in the network collects transactions and organizes them into blocks on the blockchain. When someone submits a transaction, all network miners receive it and verify its validity. As soon as approved, that same action gets automatically public on the blockchain. Everybody can see it transparent.
That’s simple as it sounds.
HOW DO NFT WORK?
An NFT may be one-of-a-kinds, like a physical painting, or one copy of many, like trading cards. As art prints of original artwork are bought and sold, copies of an NFT are still valid elements of the blockchain – but they will not hold the same value as the original.
An NFT may also represent a property or contain information (or metadata) that will automatically regulate that property’s ownership.
Besides, the blockchain keeps track of who has ownership of a specific asset.
Since each NFT is non-fungible, and each token is non-divisible and different from one another, NFTs’ attributes of originality and scarcity make them also very appealing when linked with digital art.
Finally, NFTs also make traceability much more accessible, establishing authenticity and the work’s provenance.
WHY DID NFTs GET IN THE NEWS SO QUICKLY?
One benefit of NFTs is that they can be used to determine an object’s digital provenance, allowing and proving ownership. In other words, it’s a way to create scarcity – albeit artificial – so that you can sell something for higher prices thanks to its scarcity. This ownership information is stored on the blockchain with a specific ID and linked to unique metadata. Hence, it became part of an algorithm.
More interesting is that NFTs’ value derives from owning the whole entity. The non-divisible nature of NFTs also helps with ownership rights and verifying provenance.
Besides associating the artwork to an NFT, software code called smart contracts may regulate aspects like managing transferability and paying royalties. Therefore, NFTs can be extended beyond the sole ownership and transferability and include various other applications and functionality, like linking the NFT to another digital asset.
For example, one may write on a smart contract to automatically distribute a portion of the amounts paid for any subsequent sale of the NFT back to the original owner to give the owner the ability to recognize the minor marketplace’s benefits.
Sources:
https://academy.binance.com/en/glossary/non-fungible-token-nft
