NFTs, or non-fungible tokens, are distinctive digital assets built on blockchain technology. They can represent anything, including art, sports collectibles, or even a social media post. Unlike cryptocurrencies, which also utilize blockchain for verifying ownership, NFTs cannot be directly exchanged with one another.
A non-fungible token serves as a blockchain-verified proof of ownership for a digital asset. Blockchain functions as an electronic transaction ledger, maintaining a record of NFT ownership. Transactions on the blockchain are confirmed by computers worldwide by solving complex mathematical problems.
The primary distinction between cryptocurrencies and NFTs lies in their fungibility. Cryptocurrencies are fungible tokens that can be exchanged, while NFTs, as their name implies, are non-fungible and not interchangeable.
NFTs are tokens that establish digital asset ownership, which is then authenticated using blockchain algorithms. The Ethereum network is commonly used for NFT verification. NFTs can represent any digital file, such as an image of artwork, a video, or even real estate. Converting these files into tokens and securing them on a blockchain enables efficient buying, selling, and trading while minimizing fraud.
NFTs have gained media attention through unique artwork, valuable sports cards, and computer-generated avatars. Many creatives are generating original content for distribution as NFTs.
People purchase NFTs for various reasons, such as collecting and trading assets, investment, or appreciation for the art or technology. NFTs are increasingly seen as a means to launch products, raise funds, and empower marginalized communities, potentially fostering a new type of democracy.
NFT marketplaces are the most common platforms for buying and selling non-fungible tokens. These auction platforms are designed specifically for NFTs, with popular examples including OpenSea, Rarible, SuperRare, Nifty Gateway, Magic Eden, and Blur.
NFTs, or non-fungible tokens, can be described as speculative assets, meaning their value can fluctuate over time depending on market conditions. As the value of an NFT goes up, it may be sold at a profit. To safeguard these digital assets from potential theft, owners can store them in digital wallets, which are commonly utilized for managing cryptocurrencies.
Digital wallets can come in various forms, such as electronic devices, web-based exchanges, or software applications. These wallets typically feature password protection and two-factor authentication for enhanced security. Users of hardware wallets, or digital wallets generally rely on a 12-word recovery phrase and a private key to access and manage their cryptocurrency and NFT holdings.