NFT explained. All that you should know about this emerging technology

If you are not living under a rock, you must have heard the term NFT. This might sound alien at first glance, but I am here with all the necessary information that you should know about it. An NFT or Non-fungible token refers to a unique piece of data that is not interchangeable and is stored on a blockchain. 

Blockchain, which you might already know, is a form of digital ledger. NFT might seem to be a new iteration to cryptography, but it dates back to 2014, when the first NFT, named Quantum was created by Kevin McCoy and Anil Dash that was associated with a video clip made by the former’s wife Jennifer. So, let’s now find more about NFTs.

What is NFT?

The first that you should know about is what is NFT in cryptography. NFTs are unique sets of cryptographic assets that contain unique sets of data making a particular NFT different from the other. That is why NFTs are called so. In the case of cryptocurrencies like Bitcoin, every Bitcoin is the same. It means, one Bitcoin is the same as another one, and is thus, replaceable or fungible.

On the other hand, every NFT is different, and one cannot replace the other, and that’s why NFTs are called Non-replaceable or Non-fungible tokens.

An example to make NFTs more understandable

For example, there is a book named ‘A’. Now, you can get a copy of the book from a retail outlet, or other sources like Amazon, Flipkart, get a digital copy, etc. In each case, the book that you will get will be the same.

But, if I purchase a copy of the book ‘A’, read it, write notes on the pages, and annotate some important points in the book, it becomes unique. You cannot get the same notes, annotations on any other copy of the book ‘A’. So, my copy of the book ‘A’ is unique, is different, and cannot be replaced by any other copy of the book ‘A’ 

So, while other copies of the book ‘A’ are cryptocurrencies, as all of them are the same. My copy of the book ‘A’ has some unique aspects that make it an NFT.

To make the difference between cryptocurrencies and NFTs clear, here’s another example. Let’s say, you have a 500 rupee note. Every 500 rupee note is the same. But if you purchase some product, say a pair of earphones, that pair of earphones is different from somebody else, who will use that same 500 rupee note to purchase something else. So, the products are different, and thus, they are NFTs, while every 500 rupee note is analogous to cryptocurrency.

Hope that made things clear to you. Let’s now move deeper into it.

What are NFTs used for?

Now that you know about NFTs, the question that will come to your mind is, what is the use of NFTs. Well, as my book example goes, my copy of book ‘A’ is unique, I am the owner of that unique copy of book ‘A’. 

Instead of this copy of the book ‘A’. an NFT can also be a painting, movie clip, that is created by me. So I am the owner of it. Just like that book, there can be other unique pieces too, that can be referred to, by an NFT. So, NFTs can be used to define ownership on some physical or digital assets.

Even though NFTs are not interchangeable, they are definitely transferable, and that way, you can transfer the ownership of something you own, or an NFT, to another person using this legendary technology. As the records are maintained on a blockchain, it can also be seen who had been the owner of the NFT in the past.

This eventually brings in the ability to buy or sell NFTs, and eventually transfer the ownership of a physical or digital asset in the easiest way, without any central authority, which is the beauty of blockchain technology.

Ownership vs copyright

Well, if you have created your own NFT, say a digital art or music, and you sell the NFT, it doesn’t mean the buyer of the NFT has got the copyright and the intellectual property rights of the element within the NFT. You still own the copyright and the intellectual property right, and you also have the liberty to create another NFT containing the same art or music, to somebody else. However, if the buyer wants to get the copyright, that is still possible through legal ways. So, purchasing an NFT merely means, the ownership of that copy of the art,  music, or whatever has been transferred to another person.

How to buy NFTs?

Well, knowing can buy NFTs, or how can you trade in NFTs is important. NFTs are primarily Ethereum-based tokens, and thus, if you want to trade in NFTs, you must own some Ethereum. However, observing the popularity of NFTs, other platforms too, are now offering to trade in NFTs, and a few such cryptocurrencies are Bitcoin Cash, Flow, GoChain, Cardano, etc.

There are several platforms where you can buy NFTs using the above-mentioned cryptocurrencies, and a few are opensea.io, Rarible, etc. You need to have Etherium in one of the supported wallets to purchase or trade-in NFTs on the NFT-trading websites.

Where are NFTs being used, and what is the future?

Well, NFTs are presently used to represent a number of digital assets that include plots within games, audio and video clips, memes, and many other things. There are even several musicians who used NFTs to sell their creations when the popularity grew, especially after most of their income was lost during the pandemic, which paralyzed the world, last year.

In the future, NFTs can also be used to represent ownership of a piece of land, or any other physical property, where disputes are common. Using the underlined blockchain technology, a lot can be achieved. Even the Maharastra government will use blockchain technology to issue educational certificates to ensure nobody can create fake marksheets and educational certificates. 

Even though NFTs might not be totally matured, we can expect the technology to evolve further in the coming future. So that was all that you need to know about NFTs at present. Do you have any questions? Feel free to comment on the same below.


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