Non-Fungible Token (NFT)
A non-fungible token (NFT) is a unique and non-interchangeable unit of data stored on a blockchain, a form of digital ledger.
NFTs use a digital ledger to provide a public certificate of authenticity or proof of ownership.
An NFT is a unit of data stored on a digital ledger, called a blockchain, which can be sold and traded. NFTs function like cryptographic tokens, but, unlike cryptocurrencies such as Bitcoin or Ethereum, NFTs are not mutually interchangeable, hence not fungible.
NFTs can also be used to represent individuals’ identities, property rights, and more.
It is impossible for one NFT’s (non-fungible token) to be equal to another. They are digital representations of assets and have been likened to digital passports because each token contains a unique, non-transferable identity to distinguish it from other tokens. They are also extensible, you can combine one NFT with another to “breed” a third, unique NFT.
Why Are Non-Fungible Tokens Important?
1. Non-fungible tokens are an evolution over the relatively simple concept of cryptocurrencies.
2. Market Efficiency (conversion of a physical asset into a digital one streamlines processes and removes intermediaries.)
3. Improve Business Processes
4. Identity Management (own unique identifying characteristics possible to streamline the entry and exit processes for jurisdictions).
5. Democratize Investing by Fractionalizing Physical Assets like Real Estate.
6. Creation of New Markets and Forms of Investment.
Some Examples of Non-Fungible Tokens –
1. Digital Artwork and Real Assets such as real estate. Other examples include in-game items like avatars, digital and non-digital collectables, domain names, and event tickets.
2. The most famous use case for NFTs is that of Cryptokitties. Launched in November 2017, Cryptokitties are digital representations of cats with unique identifications on Ethereum’s blockchain.
