What are NFTs?
NFTs are a unique cryptographic asset that exists on the blockchain that cannot be replicated
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In order to understand what a Non-Fungible Token or NFT is, you must first understand what makes an item fungible and non-fungible.
The word fungible refers to the kind of objects that can be replaced by identical items. Examples of such would be world currencies, company shares, consumer products, and day-to-day commodities like oil and gold.
A 20 peso bill can be replaced by any other 20 peso bill. A barrel of oil can be replaced by another barrel of oil. A bar of gold can be replaced by another bar of gold. Fungible assets can be substituted with other identical objects while retaining the same value.
Now, to understand the word non-fungible, take what you've just learned about fungibility and reverse it.
Non-fungible refers to objects that are not interchangeable and replicable. They cannot be replaced by identical items, versions, or models due to different builds, qualities, or characteristics. Examples of non-fungible assets are artworks, collectible trading cards, real estate, and even snowflakes!
A condominium unit cannot be replaced by another condominium unit. A Michelangelo painting cannot be replaced by another Michelangelo painting. A movie ticket cannot be replaced by another movie ticket for a different seat. The value of a non-fungible item lies solely on that item itself due to its uniqueness and the fact that no two non-fungible assets can ever be 100% the same.
Now, if you take this understanding of non-fungibility and combine it with that of a cryptocurrency, you come up with a Non-Fungible token or NFT: a unique cryptographic asset that exists on the blockchain that cannot be replicated. There can never be a legitimate copy of an NFT anywhere else.
Can you guess the best part about NFTs? — They can virtually represent any asset!
Have a photo of your favorite place? You can turn that into an NFT!
Have a digital artwork you’re proud of? You can turn that into an NFT too!
In turning an asset into an NFT, the non-fungibility property is brought onto the assets they represent, securing their originality.
The photo you turned into an NFT is now one-of-a-kind!
The digital artwork you turned into an NFT can’t be replicated by anyone else.
