WTF are NFTs?

Is there something behind those digital pictures of a monkey’s face? Let’s have a look.

What they are

An NFT is a Non-Fungible Token.

When we say that a token is non-fungible we mean that it cannot be exchanged for another token. For example, bitcoin is a fungible token because it can be exchanged for another bitcoin. This occurs because the properties and characteristics of a bitcoin are the same as those of another bitcoin.

However, an NFT cannot be exchanged for another because each one is different, each one has properties and characteristics that make them unique.

In turn, this makes NFTs irreplaceable, indestructible and unforgeable.

Uses

NFTs are a digital asset that represents ownership or proof of authenticity of a physical object or content.

The simplest example to understand this is the tokenization of real estate assets. There are protocols that tokenize properties such as houses by dividing the ownership of each house into many parts, each represented in an NFT.

In this way, a person who wants to invest in real estate but does not have enough equity to buy an entire property can buy a part by purchasing an NFT and benefit from its appreciation or rent.

On the other hand, NFTs are widely used to allocate ownership of digital art.

Digital art involves using technologies such as computers to create works of art. These are usually images and videos.

As we can see, owning a digital artwork is not the same as owning a traditional artwork. The owner of a painting is the one who has the painting at home, however, determining the owner of a digital artwork is not so simple. But NFTs solve this problem.

When an artist creates his digital artwork and wants to sell it what he does is to create an NFT and sell it on a platform for buying, selling and exchanging NFTs.

The process is very simple. The artist creates a digital artwork. Then the same artist creates an NFT that represents the ownership of that work, the NFT contains data such as the artist name, the work title, a description and an identifier. In this way there is only one owner of the artwork who is the owner of the NFT.

To sell it, the artist has to go to a platform for buying, selling and exchanging NFTs that will verify the identity of the artist and put it up for sale.

At the same time, NFTs can be used as a way to unite a community or to give it certain advantages.

For example, a clothing brand can give out NFTs to larger customers that allow them to access certain discounts.

The organizers of a forum can give the most active members an NFT that allows them free entry to certain events.

Marketplaces

Marketplaces are platforms where NFTs can be bought, sold and exchanged.

Opensea was one of the first marketplaces to be created and until recently was the most widely used. However, Blur is currently the marketplace with the highest volume of all.

It is estimated that it has 60% of the total volume of NFTs.

If you are interested, these marketplaces can be your first contact with NFTs.