Non-Fungible Tokens (NFT)
“Fungible” implies that it can be replaced by something similar. Therefore, “Non-fungible” means that it’s “unique” and cannot be interchanged or replaced with something else. It is essentially a tool that uses blockchain technology to provide proof of ownership of a digital asset such as an artwork, a pdf file, or even an invoice. NFTs can really be anything digital (such as drawings, music, your brain downloaded and turned into an AI), but a lot of the current excitement is around using the tech to sell digital art. With the combined power of blockchain and IoT, people could just scan a code on the tag attached to an artwork and register their ownership of the artwork on blockchain.
If you lend someone a dollar, then you do not need the exact dollar with the same serial number in return. On the other hand, if you lend a unique artwork to someone, then you expect the same exact artwork in return, and this is described as non-fungibility. NFTs feature unique characteristics and cannot be exchanged or replaced with identical tokens. Where Bitcoin was hailed as the digital answer to currency, NFTs are now being projected as the digital answer to collectables.
NFTs are also known for indivisibility. It is not possible to send non-fungible tokens in smaller denominations like in the case of Bitcoins. So, it is not possible to send a portion of a particular NFT to another person.
Enterprises would be able to convert several of their assets into NFTs and use them to raise funds, offer traceability to customers or just trade them in open market like how NFT art is sold.
NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like Bitcoin or Dogecoin, but its blockchain also supports these NFTs.
An Indian Blockchain startup KoineArth is releasing its Enterprise NFT-as-a-service to enable just that.
Twitter natively supports Ethereum NFTs as profile pictures, Facebook’s parent company META is launching an NFT marketplace, and several technology companies are investing in NFT platforms.
NFT projects can be differentiated into four categories:
1, Collectibles: These NFTs are limited in number, and no more than a specified amount can be created. Each owner is part of a larger collection
2, Artwork: These are a unique one-of-a-kind NFT. These are usually sold in a traditional auction process where one bidder holds the right and ownership to a piece of digital art.
3, Music: These are audio- video NFTs. These are either in the form of complete songs, fractionalized parts of songs, or even claims to royalties of songs produced by the artist.
4, Sports: These can be either a sportsperson’s profile or a sportsperson’s highlight reel. Pieces of gameplay are stored and tradeable on the FLOW blockchain.
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