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What is a non-fungible token?
We hear more and more about NFTs, which can also be called non-fungible tokens. Popular with cryptocurrency enthusiasts, these digital assets are nevertheless difficult to grasp for the general public. So what is a non-fungible token? What are the use cases? Explanations!
What is fungibility?
Fungibility occurs when one asset can be exchanged for another without distinction. For example, a €20 bill can be exchanged for another €20 bill since they have the same value. They are fungible. In the cryptocurrency world, bitcoins are also fungible. However, the ability to trace them does not make them as fungible as banknotes.
Understanding non-fungibility and the concept of NFT
Once we have a better understanding of what a fungible asset is, we can then look at non-fungible assets such as NFTs (Non-Fungible Tokens) or non-fungible tokens. Invented in September 2017, they each benefit from properties that make them unique and therefore non-fungible. This can be compared to a collector's item that would be unique and cannot be reproduced or exchanged without which it could lose its value, it is the same for the non-fungible token.
In order for a non-fungible token to prove its uniqueness, it must be digitized and registered on the blockchain. A large part of NFTs are found on the Ethereum blockchain. It can be considered as a large decentralized register that keeps track of everything that is registered on it. The blockchain is also an ultra secure device.
When a non-fungible token is created, several data will be digitized and registered in the blockchain. A single token can contain a large amount of information (image, video, music, code ...). It is therefore often a work that gives birth to one or more NFTs and it will be accompanied by a certificate of digital authenticity to guarantee the Internet user to be the sole owner of the NFT.
What cases of use?
As mentioned before, the non-fungible token is mainly used for the sale and purchase of works. This fairly recent phenomenon allows, among other things, to buy digital real estate in the future metaverse, but also the first SMS in history, the first Wikipedia page, or even images, music, video, etc. The owner of the NFT then becomes the sole owner of the work or part of it.
Since then, many artists, but also galleries and auction houses have become interested in NFT. For these companies, it is a new way of marketing art. The main idea is of course to make an investment that is likely to increase in value in the future and then resell the work that has been purchased. The risks inherent in non-fungible token investments are similar to those of the stock market, real estate or cryptocurrencies.
How to buy NFT?
There are several online platforms that allow you to buy NFTs. Most often, a non-fungible token is payable in cryptocurrency or conventional money. As with any sales site, one can discover a catalog of digital objects, their price, their characteristics and many other details in order to buy them or to participate in the form of auctions. Once the purchase is finalized, you become the one and only owner of this NFT.