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In your travels on the internet, you may have come across ‘NFTs’ but also the words punk, or pixel art. But what exactly are they? And why do they matter to you?
In this post, we describe what NFTs are in simple terms that regular people can understand. Jargon is kept to a minimum.
NFT stands for ‘non-fungible token.’ That in itself isn’t much help. But when you break it down, the concept isn’t too difficult.
Fungible means that two instances of a particular asset are identical to each other, and therefore, exchangeable. Let’s say you have a silver coin in your wallet. You don’t care whether you have that particular silver coin, or someone else’s, so long as you own it.
Sterling currency is another good example. If you go to a cashier and give them a note and they then give you another note back, you don’t care. It’s all the same to you.
Non-fungible is the opposite. It means that you can’t exchange something ‘like-for-like.’ An original Van Gogh painting, for instance, is non-fungible because it is one-of-a-kind. There is no other substitute.
NFTs are the same as this but in digital form. They are unique items that only one person in cyberspace can own, just like only one person can own a real Van Gogh.
Limiting the supply of a digital good seems far-fetched. After all, can’t you just copy and paste NFTs so that everyone can have one?
Well, that’s not how it works. Because NFTs rely on the blockchain, NFT creators can limit their supply. When the blockchain network agrees that a certain person owns an NFT, nobody else has ownership rights over it. They are the sole proprietor (and that can’t change unless more than 50 per cent of the network agrees).
For this reason, we’ve seen NFTs sell for incredible prices. Jack Dorsey, the founder of Twitter, sold an NFT for more than $3 million. Beeple, a music artist, sold an NFT for an insane $69 million.
NFTs are not the same as cryptocurrencies. That’s because cryptocurrencies are fungible (they have to be to function as money), but NFTs are not.
Confusion arises from the fact they rely on the same technology. Both require the blockchain for their existence, without which, they wouldn’t work.
You can’t mine NFTs like you can cryptocurrencies. That’s because NFTs are one-off creations of blockchain network members. Grimes, for instance, sold music record NFTs to the community, charging hundreds of thousands of dollars for the privilege.
At Digital Next we have been in the crypto space since 2016 and have worked on many projects in the sphere. For us, NFTs are an interesting phenomenon and one that we have developed our expertise in the last 18 months.
Some of the ways they could impact your business, in a very positive manner, could be the following.
The ways businesses could use NFT’s are endless and really are only limited by your imagination 🙂
Here are some potential business uses for NFTS’s……see if you can think of more for your business?
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