NFTs are said to be non-fungible tokens. in fact that is what they stand for. In other to understand what they really are, we shall use a currency bill such as a dollar. One dollar is exchangeable with another. if someone borrows one dollar from you, they would likely pay back with another one dollar bill that is different from the one they borrowed if they had spent the one they borrowed.
That is possible because one dollar bill is exchangeable with another because they are of the same value. So they are describes as fungible.
However, there are things that are not fungible, such as artworks. A painter cannot draw the same work of art that are are exactly the same even if they are the same picture. There would be slight variations no matter how minute. So such work of arts are non-fungible because they are not exactly the same. Their values also wouldn’t be exactly the same.
Also, gold bars may have the same value if they have the same weight. However, makers usually engrave bars of gold with unique identification numbers with which such assets can be identified. Thus making each bar unique.
Linking Physical Items And Blockchain Technology
Non fungible tokens are increasingly popular because they are the link between blockchain tokens and physical objects. These are unique items that have been registered on the blockchain that makes it easy to track the origin and ownership of every single one.
Non-fungible tokens actually represent items that are supposed to exist in the real world. In fact, the minting of NFTs is limited only by the minter’s imaginations.
Also, as we are aware, most physical items such as houses and diamonds have their uniqueness so that even when they are identical, they are not exactly the same and can have specific unique identifiers.
This is what NFTs represent. Unique digital items that are representations of physical assets that have been minted and placed on the blockchain which people can collect and own.
Why Are NFTs Important And Valuable?
As we have already stated, even though some physical items may be identical, they’re not exactly the same. The blockchain makes it possible to represent physical items through non-fungible tokens and also impart value to these items while ensuring that the advantages of the technology such as immutability and transparency are imparted on the items.
When an NFT has been created on the blockchain, it is easy to prove ownership or origin through the transparency of the blockchain. Also, it is possible to transfer the ownership of the items through the blockchain also.
The Importance of NFTs To Creators
⦁ The ability to retain ownership or give them up rests with the creators of the token.
⦁ There is better protection for artist in terms of royalties.
⦁ They give better storage avenue for users of these NFTs.