Decrypting NFTs: Everything You Need to Know

Non-fungible tokens, being digital assets with unique identifiers, have been gaining traction in India lately. It differs from other cryptocurrencies like Bitcoins, that has a fungible nature and can be used interchangeably. A non-fungible token is used for recording the ownership of a single digital or physical asset and can represent noteworthy tweets, Digital Art, video parts, etc.

Non-fungible tokens as data assets are used to maintain the true ownership of an asset using a digital ledger called the blockchain. Protecting the ownership of a digital asset through NFT can allow the rightful owner to conduct transactions and transfer the token, which aids in a contactless transaction.

In a post-pandemic phase where people and businesses prefer contactless purchases, bids are best conducted online. Connoisseurs of fine arts and jewelry seek past and current ownership of the items to determine their authenticity, which can be presented as a non-fungible token. This unique digital identifier cannot be altered, substituted, or subdivided because of blockchain recording its veracity. ?

How Does NFT Function?

An NFT is used as a unique digital identifier of a single digital or physical asset that can represent anything- trade cards, tunes, Digital Art, and even actual physical goods like real estate properties which are all considered assets.

An internet of assets is being created with the aid of NFTs with the aim of bringing physical domain features as proof of ownership, scarcity, and uniqueness to the digital realm. While anyone can obtain a copy of the artwork provided, only the purchaser can claim ownership. Furthermore, the owner is allowed the power to assess the scarcity of the asset and can even turn it into a rare collectible to increase the asset's worth.

NFTs are characteristically different from other cryptocurrencies like Ether or Bitcoin in that the latter are fungible, which refers to the fact that they can be used interchangeably. In this, bitcoins are very similar to physical currency; one dollar can be exchanged with another because they are of the same value. On the contrary, an artwork, be it a Tweet or a video, or a Digital Artwork, has its own value in that it is one-of-a-kind having a value that is unique and non-transferable. Hence, you cannot trade NFTs for something similar to what you can do for Bitcoins.

Practical Implications

The art and entertainment world has shown a lot of interest in NFTS recently as it is allowing artists to showcase their work digitally through the use of blockchain and has allowed the owners to convert their artworks into secure assets that can be sold.

Mike Winkelmann, a digital artist, preferably known as "Beeple," has sold an NFT of his artwork for 69 million USD. The former CEO of Twitter, Jack Dorsey, sold his first tweet successfully as an NFT for $2,915,835.47 in 2021.

Amitabh Bachchan, an Indian veteran actor, has also shown his interest in NFTs that will contain his limited-edition artworks inspired by his real-life experiences.

As of now, we are still in the early days of non-fungible assets, and the future of NFTs is yet to be explored as it holds tremendous opportunities in investing.?