NFTS 101: Non Fungible Tokens, or NFTs, may sound like a complex idea, but let’s break it down in a way that’s easy to understand. But our first step if to explain some terms that we will need to know. Let’s start with these to get our base level of knowledge. Keep in mind that all of this functions in a digital environment, and is separate system from our familiar banking system. Make NFTs Work for You
Let’s Start Here:
- Blockchain: The blockchain is a distributed, decentralized, and public digital ledger and is used to record digital transactions. In other words, the blockchain is a digital recording system that stores its information securely. This makes it extremely difficult, or even impossible to modify, hack, or cheat this system.
- Token: Tokens, also known as crypto tokens, represent digital assets on the blockchain. These can represent anything that has a value.
- Fungible: This is something is replaceable by another identical item. In this case, fungible tokens are totally interchangeable. For example, Bitcoin is a fungible token. You can exchange any Bitcoin for any other Bitcoin. This is similar to our regular currency, where our dollar bills are also fungible tokens. In the digital world, these are typically the cryptocurrencies that exist on the blockchain.
- Non-fungible: This is simply a unique digital asset, and enables the tracking of the actual ownership of that asset. In the non-digital world, this would be like the deed to your house. It is unique, and provides proof that you own the house. Non-fungible tokens also are not divisible, because they represent an entire entity. You can also buy and sell them online, most likely using a cryptocurrency.
NFTs 101
Imagine you have a special trading card with your favorite game character on it. It’s not like regular cards you can swap with your friends because it’s one-of-a-kind. Your card has a unique code that says, “Hey, this is the only card like me in the whole wide world!” That’s a bit like what an NFT is.
Non-Fungible – NFTs 101
Now, let’s talk about the “non-fungible” part. The word Fungible actually means something that can be easily replaced. Think of it like cookies. If you have one cookie and someone gives you another, you don’t really care if they’re exactly the same. They’re fungible—they can be swapped without any difference. But imagine you have a magical cookie that can’t be copied, and it’s the only one of its kind. That’s non-fungible. NFTs are like those magical cookies in the digital world.
Digital Collectables – NFTs 101
NFTs live on the computer, and they’re made using something called the blockchain. Picture a digital notebook where everyone writes down who owns what. When you create an NFT, it’s like adding a special page to that notebook saying, “This digital thing is owned by this person, and there’s no other exactly like it.”
Now, let’s dive into why people are excited about NFTs. Artists, like the ones who draw cool pictures or make awesome music, can turn their creations into NFTs. It’s like putting their masterpiece into a digital frame and saying, “This is the original, and only one person can have it.” This way, artists can make sure their hard work is appreciated and owned by someone who loves it.
Remember the trading card idea? Well, NFTs also let you own digital collectibles. If you’re crazy about a video game or a famous character, you can own a unique digital item related to them. It’s like having a super rare virtual trophy that shows you’re a big fan.
Data NFTS
Collections of data can also have a NFT to prove the ownership of the data. In this application, it is now being used to allow each of us to have an NFT that represents our personal health data. By using an NFT, we have total ownership of our data, AND it is securely stored. As we continue to collect our own health data, the size and value of the NFT can grow.
Value NFTs 101
But how do people buy and sell NFTs? It’s like a digital auction. People use a special kind of money called cryptocurrency to buy NFTs. Once you own an NFT, it’s recorded in that digital notebook we talked about—the blockchain. This makes sure everyone knows you’re the proud owner of that special digital item.
Now, some people might wonder, “Why would anyone pay for something digital when you can copy and paste it?” Well, that’s where the magic of ownership comes in. When you own an NFT, it’s like having a certificate saying, “I officially own this, and it’s one-of-a-kind.” It’s about the joy of owning something special, just like having a signed poster from your favorite movie star.
In the big world of NFTs, people are exploring new ways to use them. Some are even making virtual worlds where you can buy land, build things, and truly own a piece of the digital universe. It’s like having a little corner of the internet that’s yours.
Wrapup
So, in a nutshell, Non Fungible Tokens are like digital certificates of ownership for special digital stuff. Whether it’s amazing art, cool virtual items, or even a piece of the digital world, NFTs are making waves in the online realm, letting everyone own a piece of the digital magic.