Explaining NFT in simple words

Just yesterday, a digital artwork by the artist Beeple was auctioned off for $69 million in an online auction by Christie’s, bringing attention to the latest trend of the crypto asset NFT. These assets reflect the forthcoming blockchain boom, a new digital era.

NFT is a short-term non-fungible token. The word derives from the word – fungible, which simply means freely exchangeable or replaceable. A fungible asset can be exchanged in any form – in whole, in part, or for another kind of asset.

In simple words –

• -          Unique, unchangeable, Original
• -          Secure Ownership of digital assets
• -          Can be anything such as a clip, image, quote
• -          Blockchain Entry

For example, a $20 bill can be exchanged with any similar bill. It can be exchanged with another $20 bill, or broken into many parts – let’s say twenty $1 bills. It could be exchanged with another property that holds a similar value. However, a dollar bill or cryptocurrency can be termed non-fungible too, as each of them has a different origin and history, and can carry unique value. It is the exchangeability that creates the difference.

This is where non-fungible tokens arise. NFTs are a special kind of unique crypto assets on the blockchain that is guaranteed non-interchangeable with one another for equal value. NFTs are different from cryptocurrencies as they offer unique value.

A non-fungible token can be anything – a video game, a video clip, a work of art, a collectible card or image, a gif, a special moment, or any other unique object which is stored and managed on a blockchain.

One could wonder why do NFTs matter and how are they different, or why should they pose any value? Any digital piece – image, clip- can be copied and downloaded numerous times. Why should anybody pay for something that can be enjoyed free at any time? According to experts, it is ownership that creates value.

It can be compared to a physical world artwork that is open to everybody at museums. Anybody can see a portrait of the Monalisa, any of Vinci’s work, or Picasso's work, but ownership is different. The original piece of art carries timeless value in the art world. These works are often auctioned and sold at a mammoth price. No matter how many times the work is recreated, the original contains a unique different weight.

A non-fungible token brings that real-world value to the digital world. It creates a unique proposition through blockchain ownership. NFT provides an entry on a blockchain. It solves the problem of countless copies by providing unquestionable ownership to the original piece.

NFTs provide value to both the buyer and the creator. The buyer gets secure ownership which actually has value, while the artist gets the scope to sell a work. It can give back power to the artist.

NFTs are currently in the spotlight. Many celebrities are offering their own NFTs. Billionaire businessman Mark Cuban has offered his own NFT of his quotes. NFTs of the NBA are a hotcake right now. A dunk video of basketball player Lebron James has been sold for millions. At least $230 million have been reported to be spent on buying NBA video highlights at Topshot, which provides NFTs of NBA.

The market was valued at roughly $40 million a couple of years back. It has grown by over $330 million in value since then. Future indicates that it will grow more and probably open a new type of digital era.