What are NFTs

So, you’ve heard all the fuss about NFT’s but like most of Planet Earth you don’t know what the hell they are right?

Essentially you can consider an NFT to be a piece of Digital Art that cannot be copied. (The “not copied” part will need more explaining later, it’s not really important right now). But in essence if you imagine a “picture” like this…

It can be made into an NFT by linking it to a Blockchain. The process of “linking it” includes a “digital contract” that makes the image/NFT unique.

It is this process that makes the image an NFT.

The “digital contract” is known as a Smart Contract in the world of NFTs.

So, if you have even slightly grasped the concept of:

DIGITAL IMAGE
+
LINKED TO A
BLOCKCHAIN
=
NFT

NFT
=
NON-FUNGIBLE
TOKEN

It’s fair to say you are better focussing on what an NFT is, rather than what NFT stands for! Once you look at it that way it becomes a lot easier.

NFT = Digital Image, linked to a Blockchain.

However, in the great scheme of things its only right that we try and explain what is meant by Non-Fungible Token! So here goes…

“Non-Fungible” basically means something that can’t be replaced with something else. So once you create the NFT it’s unique (can’t be copied) and because it has to be linked to a Blockchain, which “costs” something in itself, and because at the point of minting the NFT is assigned a value (the amount paid for it) it HAS VALUE.

Combined with its link to a Blockchain (via a Smart Contract) it is and will always be uniquely identifiable.

So, taking our NFT image from before, and if demand is such that there is a strong interest in the piece it can be traded, sold on, often for a profit.

Quite often an NFT (or collection) that grabs the NFT Public’s imagination can rapidly be purchased and re-sold creating a surge in value. This can typically run into thousands of dollars in value and even millions for a single piece.

What the hell are NFT‘s?

Then you can also imagine the same being applied to a mp3 music clip or an mp4 video clip. These too can be linked to a Blockchain via a Smart Contract and will become an NFT.

It’s fair to say you are better focussing on what an NFT is, rather than what NFT stands for! Once you look at it that way it becomes a lot easier.