A non-fungible token, commonly known as an NFT, is a unique cryptographic token on a blockchain network. Because it has a unique identification code and metadata, unique cryptographic tokens cannot be replicated.
NFTs function as communicators or information tokens. However, unlike cryptocurrencies like Ethereum and Bitcoin, NFTs are not fungible and mutually interchangeable.
NFTs essentially act as a digital contract to present ownership of digital media like videos, art, memes, music, and even real-life objects like real estate and designer sneakers. Each NFT contains an address or unique code that exists on a blockchain. A blockchain is an online public ledger or database that records transactions. Thus, information is open to all.
Buying a digital asset is like buying a digital certificate of ownership. If you purchase digital art from the NinjaPepe Club, you buy a unique key that confirms that the NFT is exclusively yours. Once you buy NFTs, you'll get a private key that links you to the blockchain and verify your ownership.
On the one hand, any on the internet can simply search for an image of an existing NFT project and save it on their computer or mobile device. Buying NFTs means owning the original copy; anyone can verify your claim.
Why purchase NFTs when you can keep the artwork for free? Let's say you buy an original Monet painting. The original has a much higher value than the duplicates you can find at a museum souvenir shop. While anyone can have a replica for a more affordable price tag, owning NFTs means you are the exclusive owner of the original digital file. An NFT can be worth a lot of money, especially if the associated digital files become more popular. Thus, you can even make money from NFT sales.
What's the difference between fungible and non-fungible tokens?
A fungible token like Bitcoin or Ether can be replaced, while a non-fungible token cannot. If this still sounds confusing, fungible means something can be replaced with another identical item. It also means the thing is unique. For example, a dollar bill is fungible because the value remains the same once you trade it with another dollar bill.
Another significant distinction between the two concepts is the information that these store on the blockchain network. Fungible cryptocurrencies such as Bitcoin have value. Meanwhile, an NFT is a digital deed of ownership to a digital file. An NFT's value is tied to the underlying asset it represents.
A deed to a house or property cannot be replicated in the real world. The same principle applies to the coding and information stored within an NFT on a blockchain network.
An NFT is a non-fungible token used as a unit of data stored on a blockchain that certifies the uniqueness of a digital resource.
Smart contracts are programs that reside on the blockchain and are executed deterministically by all nodes, from the same inputs they produce the same results; in the case of NFTs the code executed by these pieces of software is actually immutable and certified, so it excludes the risk of counterfeit.
The NFT is embedded within the blockchain, the decentralized digital ledger that records every single transaction ensuring transparency and traceability onto the chain.