What is NFT?
It stands for Non-Fungible Token. And to understand what it means, let’s quickly break down each of these words together.
An NFT is first and foremost a Token. A Token is used to represent many things, including art, video, music, and even physical objects. In practical terms, there are many things that can be turned into Tokens.
These Tokens are mostly PNG images, but also animated images (GIF), MP4 audio tracks, or videos.
What is the difference between an Image and an NFT?
For a simple image to become an NFT, it must be store on an online network called the Blockchain. A unique “serial number” is then created each time a Token is placed on the blockchain. Each NFT will have it own serial number, which makes it unique. This is also what makes each Token non-fungible.
What does it mean when we say that something is fungible?
We say that an object is fungible when it can be replaced
by another identical object. Example: A $10 bill can be replaced by another $10 bill.
Its value will be strictly the same. It is therefore a fungible object.
On the other hand, your cell phone, your watch, your clothes and anything else you own that you could go and sell on eBay falls into the category of non-fungible objects, because each of these objects is unique and can have a completely different value.
Likewise, one NFT cannot be exchanged for another NFT. Because even if it is the same image, each copy of this image has its own serial number and therefore has its own value, thus making it unique.
A Non-Fungible Token (NFT) can therefore be simply described as a unique digital object, stored on the Blockchain.
How do NFTs work?
NFTs are bought and sold with crypto-currencies. You’ve probably already heard of Bitcoin? It’s the most famous and widely used cryptocurrency today.
The second most popular cryptocurrency is called Ethereum. It is with this currency (Ethereum) that it is possible to buy the majority of NFTs. And the Third is Called Solana. Which we will be covering in this section of the basic training.
The Ethereum cryptocurrency has its own Blockchain: a sort of decentralized public ledger that stores and verifies the details of all transactions made on its network. When you buy or sell an NFT using Ethereum, the blockchain keeps track of its current owner, as well as all previous
owners.
Anyone can find out who owns a particular NFT, who has owned it in the past, at what price each transaction was made, on what date, etc.
By being decentralized, NFTs on the blockchain are not stored on a single server. The ownership record of all NFTs is stored on many servers and computers around the world, called “nodes”. This makes counterfeiting virtually impossible.
How are NFTs different from cryptocurrencies?
NFTs and crypto-currencies go hand in hand, but they are not the same thing. The difference is that crypto-currencies are fungible: you can exchange one Bitcoin for another Bitcoin and the value will be the same.
NFTs are different because each NFT has a unique serial number on the blockchain. Therefore, each NFT is one of a kind and can have a completely different value