What are NFTs and Why is Everyone Talking About Them
Everywhere you see, people are talking about Non Fungible Tokens or NFTs. In fact, Collins Dictionary has even declared it as the Word of the Year for 2021.
What is an NFT
Let’s first understand, what’s a fungible token.
In economics, a fungible asset is something with units that can be readily interchanged. For example, money.
If you give someone ₹100 note and get back 2 ₹50 notes, you just exchanged a fungible asset. And the exchange has the same value.
On the other hand, a non-fungible token must be unique and not interchangeable. For example, an asset such as digital art that can be sold.
NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own.
Original versions of viral videos, memes or tweets can be sold as if they were art.
With NFTs, artwork can be “tokenised” to create a digital certificate of ownership that can be bought and sold.
If NFTs are digital, what drives these transactions
Just as is the case with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain. This ledger is maintained by thousands of computers around the world and hence cannot be forged or changed.
NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the token.
Why is everyone talking about NFTs
The interest in NFTs has spurted this year with some high-profile sales.
It has also received attention for the potential of the technology as well as the numerous brands and celebrities getting on the NFT bandwagon.
All kinds of digital objects – images, videos, music, text and even tweets – can be bought and sold as NFTs. From virtual games to artwork, NFTs can be used to own any such asset.
In India, NFTs got massive attention when superstar Amitabh Bachchan set up rare art NFTs. Some of them were Madhushala NFTs, The Loot Box NFT, Iconic Vintage Posters NFT and BigB Punks. The sales were in crores.
For an artist, an NFT is an exciting way to sell their digital art.
To a buyer, an NFT allows them to own the original item. Not only that, it contains built-in authentication, which serves as proof of ownership.
While many fear that NFTs are a bubble that would soon burst, they may very well be the future. Only time will tell.
If you have something to share with the world, a story, an experience, a concept, you can be featured on BeStorified. Check guidelines here.
