What Is An NFT? A Basic Guide For Dummies

Today I’ll talk about NFT’s, and hopefully, by the end of this article, you will have a better understanding of what exactly is an NFT. I’m sure you’ve heard or seen these three letters everywhere, and you probably wonder what NFT means.

For Starters, NFT stands for non-fungible tokens.

Now, what does Fungible mean?

It is an item that can be interchangeable, exchanged, or traded for something else while keeping the same value. Like Gold, Stocks, currencies like the Dollar, Euro, or cryptocurrencies such as Bitcoin, Ethereum, and many others.

If something is fungible it can easily be replaced by something that fulfills an identical function.

If you were to give someone a 20 dollar bill and they gave you back two 10 dollar bills, that would equate to the same thing because 20 bucks is 20 bucks, it holds the same value regardless of how many bills you get back from that person, it’s still the same thing. It could be in 1’s, in 2’s 5’s or 10’s. It’s still 20 dollars.

Now, back to non-fungible tokens.

NFT’s, on the other hand, are unique and not mutually interchangeable, which means, two NFT’s cannot technically be identical. Simply because they do not hold the same value.

Things like Artwork, land, events are considered non-fungible because they cannot be traded or exchanged for the same value. They are limited in time, location, source, or accessibility.

An artwork, for example, can be unique because only one artist can create the art itself. There is a specific date and time when the art was created. So if you were to duplicate the same art piece, it would not hold the same value as the original because of the time and source factor. Meaning it was not created at the same time nor by the same artist. Needless to say, if you were offered both art pieces, you would go for the original one and not the copy or fake one.

The same thing applies when you buy land. The land is identified by its location, square feet, acres, soil, or trees. These factors alone make it so that no other lands could ever be identical.

Even assets like diamonds, or baseball cards are not fungible because each unit has unique qualities that add or subtract value.

For instance, because individual diamonds have different cuts, colors, sizes, and grades, they are not interchangeable, so they can’t be referred to as fungible goods.

So, NFT’s are unique items that cannot be exchanged or traded for the same value.

Why are NFT’s now everywhere?

Product Photography Basics | What is an NFT?

The reason why you’ve seen NFT’s everywhere lately is because of cryptocurrency. Although this technology has been around for a while now, more people are gradually gaining interest in the crypto world.

So in crypto terms, an NFT is a unique cryptographic code that is attached to a single digital or physical asset.

So the point is that – for the first time – holders of digital assets (like digital art or digital paintings) have verifiable evidence that they actually OWN that asset. And that’s because the NFT-asset is minted or created on what they call the blockchain with a time-stamp and a specific ID to the art, just like a serial number.

For years, artists have been selling their digital paintings online and only had their words to guarantee that the piece was created by them, there was no proof of authenticity. And this allowed for a lot of theft. As you can imagine, I could just take a screenshot of the art piece or download it to sell it back on the black market with no verifiable evidence that I own it.

But now, if you hold the NFT for your art piece, I would only be selling an unverified copy of the art piece and the original artist would hold the rights to the only verifiable copy of the art piece on the planet, and the entire market will be able to see the difference.

This technology has helped artists so far in that they can control who they sell to, how much they sell their art for, and how many copies are on the market.

People are gaining more interest in NFT’s because they have realized that the middle man is no longer needed in these types of transactions.

In music, for example, imaging an artist releasing their music as NFT’s, allowing their fanbase to access their music without dealing with record labels that take a cut of the money.

And the same applies to art collectors. No more travels around the world to different art galleries just to see the art pieces. They can now browse through different art pieces online without leaving the comfort of their home.

Now, if you’re still confused by the hype and all these ridiculous numbers being thrown around, it is important to note that the NFT market is currently overcrowded and not necessarily serving its purpose just yet. You’ll see a tone of pointless art and people selling their art for outrageous prices, especially if they have a big following or simply just famous. Do not let that get to you, just try to understand the basics first and go from there.

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