If you have recently been around artists, musicians, or cryptocurrency dealers, you have probably heard of NFTs. Scratch that, you definitely have seen that word flying all over social media already. NFTs are gradually becoming the most used buzzword in the blockchain, music, and art industries in recent times.
Perhaps you are wondering why there is so much buzz about NFTs and if it is truly worth the hype. You may also want to know why people are talking about it so much, and what they are used for. You will find out in this article what NFTs are, what they are used for, their applications across various fields, and what differentiates them from cryptocurrencies. Let's dig in!
What are NFTs (Non-fungible tokens)
NFTs are known as Non-Fungible tokens. To better understand what NFTs are, it is best to explain what fungible and non-fungible mean. Fungible simply means something interchangeable while non-fungible means something non-interchangeable. Therefore, a non-fungible token is a non-transferable unit of data that may be sold, exchanged, or held on a blockchain, and stored on a digital ledger.
Photographs, Art, videos, and music may all be linked to various sorts of NFT data devices. NFTs have addressed the long-standing problem of duplicity in a world filled with plagiarism. Each NFT is unique such that there cannot be a copy of it, and it can only be owned by one person. Even if they are in series, each item in the series has its unique variations.
How do NFTs function?
Most NFTs function on the Ethereum blockchain. The blockchain technology on which Ethereum was built also enables NFTs, it holds additional information that allows them to function differently from, say, an ETH coin or any other cryptocurrency. Although, if explored, other cryptocurrency blockchains may be able to implement their forms of NFTs.
What are NFTs used for?
The most intrinsic use of NFTs is tokens. These tokens are usually used to indicate ownership of unique items. They allowed us to tokenize items such as art, music, treasures, and even real estate. NFTs are unique and can only be owned by 1 person at a time and this is usually regulated by the Ethereum blockchain. Therefore, no one can change the record of ownership or create a new NFT.
**NFTs popular use cases **
NFTs have a wide range of use cases across industries, some of which include;
Music: NFT tokens yielded about $20 million in the music industry in the first quarter of 2021, according to reports, with musicians selling artwork and songs as NFT tokens. An NFT was released last year to promote the Kings of Leon album When You See Yourself and it was sold at a profitable price. There are quite a number of popular musicians who have used NFTs in recent times such as Kings of Leon. NFTs are also beneficial to upcoming artists because it gives them a way to sell their work that there might not be much of a market for.
Trading: NFTs have been used to trade digital tokens that are linked to a digital file. Ownership of an NFT is frequently linked to a license to use the underlying digital asset, but it seldom grants the buyer copyright. Some agreements only allow for personal, non-commercial usage of the underlying digital material, while others allow for commercial use.
Games: The games played on or with NFTs are not similar to cryptocurrency games. This is because NFTs are encompassed in the game world such that they are used in the rules, procedures, and player interactions of an NFT game. They can also be discovered as treasures in digital form while playing the game. The gamer is at liberty to exchange or trade their NFTs with other gamers for a profit. NFTs can be used to represent in-game assets, such as digital plots of land, that are controlled "by the user" rather than the game creator, according to some commentators, by allowing assets to be exchanged on third-party markets without the game developer's approval.
What distinguishes NFTs from cryptocurrency?
NFTs and cryptocurrencies are both built on the blockchain and use comparable innovation and standards. As a result, they will frequently attract similar players. NFTs are a subset of crypto culture, and you'll almost certainly require cryptographic forms of money to trade them.
The fundamental distinction, though, is evident in the name. As explained earlier Cryptocurrency is an example of a fungible item that is it is exchangeable it has economic value and is fungible, just like the regular fiat currency. Each crypto token you hold in cryptocurrency has the same value as the next one; 1 $SOL Equals 1 $SOL. While the reverse is the case for NFTs because they are non-fungible and their value extends well beyond economics.
Posted from HypeTurf