A non-fungible token (NFT) is a type of digital asset that represents ownership or proof of authenticity of a unique item or piece of content.
Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and can be exchanged on a one-to-one basis, NFTs are distinct and cannot be exchanged on a like-for-like basis.
NFTs are built on blockchain technology, typically utilising platforms like Ethereum. Each NFT is assigned a unique identifier that distinguishes it from other tokens, making it indivisible and irreplaceable.
This uniqueness is a key feature of NFTs and allows them to represent ownership of specific digital or physical assets, such as art, collectibles, music, videos, virtual real estate, or even in-game items.
The blockchain serves as a public ledger that records the ownership and transaction history of each NFT. This provides transparency, traceability, and immutability, preventing unauthorised modifications or fraudulent claims of ownership.
One of the defining characteristics of NFTs is their ability to contain metadata, which can include information about the asset they represent, such as the creator, description, edition, and provenance.
This metadata helps establish the authenticity and uniqueness of the asset, allowing collectors and buyers to verify its origin and value.
NFTs have gained significant popularity due to their potential to revolutionise ownership and monetization in the digital realm. They enable creators to tokenize their work and sell it directly to buyers without intermediaries, opening up new possibilities for artists,
musicians, and other content creators to monetize their creations. NFTs also introduce the concept of royalties, enabling creators to earn a percentage of subsequent sales whenever their NFTs are resold in the secondary market.
The market for NFTs has seen explosive growth, with high-profile sales and auctions grabbing headlines. However, it's important to note that the value and demand for NFTs can be highly subjective and speculative
and the market can experience significant volatility. Additionally, environmental concerns have been raised due to the energy consumption associated with blockchain technology used in NFTs transactions.