NFTs or Non-fungible tokens are forms of data that live on the blockchain.
Anything. Images, videos, audio and other forms of creative expression. NFTs can also include tokenizing real-world assets on the blockchain. Tokenizing something means to fractionalize it in different pieces. This is so that each asset’s ownership can get distributed across many people. Based on this logic, one can tokenize real-world assets, objects and physical goods. The NFT market is global in scope. Anyone with an internet connection and a cryptocurrency wallet can interact with NFTs via the blockchain.
What makes anything valuable?
Gold is valuable because it is scarce and produced each year in limited amounts. Would we value gold the way we do at the moment, if it was as abundant as a metal like copper or aluminium? No, we would not, despite how good Gold looks and feels like. Hence, the more an item or asset is scarce, the more valuable it is in the eyes of human beings.
NFTs create digital scarcity for anything.
While we like to say that we live in a globalized world, we do not. There are a lot of restrictions to the free movement of people, capital, products and services. This is because countries are choosy about letting in what they want. They believe certain rules would be good for their people. But, nation-states are hamstrung owing to rapid technological change.
Because imagine everything that can get tokenized and put on the blockchain. Once done, anyone can create, buy and sell whatever they want to. It levels the playing field for all the people in the world who face undue socio-economic restrictions. This was something never possible before. All one needs is a cryptocurrency wallet and some fiat currency to become a global citizen. Blockchains can connect lenders to borrowers, artists to buyers, buyers to sellers, at a true global scale.
Non-fungible means that the form of data is unique in its scope of representation. It cannot get exchanged for another NFT because no two NFTs are one and same. Each one is unique and has a unique ownership. It's easier to think of this as any product you purchased today. Your smartphone cannot get exchanged for another smartphone. Likewise, NFTs can get exchanged for cryptocurrency only. Unless, of course, two owners make a personal deal. This property makes NFTs very much like real-world objects.
The benefits of blockchain technology are too big to ignore. Now that NFTs are out of the bag, people realize they are in control of their creations and finances. We do not need to depend on any centralized intermediary to manage or represent our future for us. This is a time for diligent learning.
Last updated on:15th February 2022