NFTs stands for non fungible tokens for understanding NFTs we first need to understand what is fungibility, fungibility means the ability of an asset to be exchanged or substituted with similar assets of the same value a simple example of a fungible asset is a currency of any country such as a dollar, and non fungible is something that is unique and irreplaceable and it’s not freely exchangeable best example of it is a painting.
So, NFTs means unique and digital collectible digital items that you can create in which no items are ever identical, NFTs have only one copy that exists and they can have unique features built in also, you can put in your NFTs another piece of work, some special piece of work of art in the unlockable content suppose your NFTs is a music than you can add a special unreleased studio version then only the person who owns that NFTs gets access and can unlock that so such in-built features can include things like musical content, special artwork, rare pictures. It’s your art it’s your world and it’s your rules.
How do NFT works?
The idea behind NFTs is that you have this digital signature in way that a great work of art might bear the signature of the person who created it so you can always go and look at the original and say, yes this is authentic. A NFT ensures this having through the blockchain where the information is recorded.
They are like cryptocurrencies but unlike fungible cryptocurrencies bitcoin, ether and Dogecoin they are completely unique and they exist as a string of numbers and letters stored on a blockchain ledger this information contains who owns the digital asset, who sold it and when it was sold, this information is also encrypted using cryptography.
In doing so they fix a problem for digital creators on internet of how to make their creations rare and valuable so with NFTs you try to create scarcity because they are non-fungible and because, of that, there is only one of these that can exist and that implies that it can not be traded for anything similar because there is nothing similar that exist, so ending up having that scarcity and that limitation which helps drive up some of the prices.
People are really excited about NFTs as because unlike blockchain of bitcoin they are able to do to more complex things with it such as you can wind up terms and conditions within it and you can have NFTs which mints other NFTs, some believe that NFTs have a great future ahead while critics say it is just a bubble and only time can tell what lies in the future for NFTs.