What is NFT?

Non-fungible token? NFT? Why do people pay for it? What are the incentives to buy the NFTs? Is it a kind of digital art? Let’s find answers to all the question and examine what the combination of these three letters means?

How to describe it in a simple way? A digital asset that depicts real-world elements like as art, music, in-game items, and films is known as an NFT. They’re bought and traded online, often using cryptocurrency, and they’re usually encoded with the same software as many other cryptocurrencies.

What is the difference between NFT and cryptocurrency? The answer should be found in the word “fungible”. Cryptocurrencies and physical money are both “fungible,” meaning they may be traded or exchanged for one another. So, it means that they’re also worth the same amount of money — one dollar is always worth another dollar, and one Bitcoin is always worth another Bitcoin. NFTs are non-fungible, which means that each token contains a digital signature that prevents it from being substituted for or compared to one another. So, NFTs are completely unique.

As NFTs include unique data, it’s simple to verify ownership and transfer tokens between owners. They can also be used to hold specific information by the owner or author. Artists, for example, can sign their work by putting their signature in the metadata of an NFT.

Would you like to have or create your own NFT? Write in comments!

Sources: Forbes Advisor, The Verge