NFTs Explained

NFTs Explained

What are NFTs?

NFTs, or non-fungible tokens, are cryptographic assets on a blockchain that can be distinguished from one another by their distinctive identification codes and metadata.

In other words, NFTs are digital assets that can be bought, sold, and traded at will, just like any other asset you own. NFTs are tokenised. This means that every single one of them is distinct from all others, even other iterations of the asset that the NFT is based on. When something is tokenised, a digital ownership certificate that verifies this is attached to it.

To fully comprehend NFTs, it is important to comprehend what is meant by the word “fungible.” 

Fungible is something that is easily exchangeable for items similar or comparable. An example of a ‘fungible digital asset’ is Ethereum. This is because each Ethereum is worth the same as every other Ethereum.  

How NFTs Link to Cryptocurrency

NFTs are blockchain-held tokens that stand in for a special asset, whether it be digital or physical. NFTs are traded using a variety of tokens, such as Solana and Ethereum, and are secured on cryptocurrency blockchains. 

Current Applications

Now that we know what NFTs are, let's talk about some of the current purposes that NFTs serve. 

One of the most common uses is in various "art" projects. The Bored Ape Yacht Club (BAYC) project could serve as an illustration of this. Owners of these projects get to experience and gain from the various benefits that each project offers, including a sense of community. Something like this, you could argue, isn't particularly Web 3.0. I suppose you're right. The majority of these projects are currently more geared toward Web 2.0 with the possibility of converting to Web 3.0 when it becomes available. Will these initiatives even exist in Web 3.0, though? We'll just have to wait and see, since Web 3.0's concept may go far beyond our wildest expectations.

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