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What is an NFT?
Super short guide to NFTs for anyone!
One line knowledge:
NFT = a certificate of authenticity
That’s it.
Now, having that behind us, let’s go a bit deeper.
What is an NFT or Non-Fungible Token?
NFT stands for Non-Fungible Token, and these are tokens that are non-interchangeable easily as their different.
An example of a fungible token would be a dollar or a bitcoin. Each dollar is the same as every other dollar and carries the same value. We could exchange our dollars without anyone loss. Same for bitcoin, the most popular cryptocurrency.
However think about art, for example let’s take two Picasso paintings. Not only each Picasso artwork is different, they are also valued differently. You can get the cheapest paintings of Picasso for around $100,000.
That’s a lot, but it’s small in comparison to his most expensive painting sold to date: Women of Algers were sold for $179 millions of dollars in 2015.
So you see that you can’t really exchange two different Picasso paintings without loss for one of the sides.
Not an NFT is similar to art, and often seen as ‘these cartoon images of animals’. That’s because each non-fungible token — each online certificate of authenticity — carries data on what it certifies, e.g. an image, a movie, a real-estate and so on.
So people conflate this certificate with the object certified by it which is 99% correct. In other words you can conflate this image of Bored Ape #7033:
with the certificate, and talk about it as an NFT.
For other example of NFTs, feel free to explore OpenSea, the largest NFT marketplace, where you’ll see what people are collecting.
What is a token in crypto?
Now, you might ask ‘but what is a token?’ and that would be an awesome question. I’ve started talking about fungibility without explaining tokens for a reason. You see, tokens are…
