What is NFT: a simple explanation for the crypto-newb

Chris Burns - Mar 12, 2021, 1:47pm CST
What is NFT: a simple explanation for the crypto-newb

NFT stands for non-fungible token, a cryptocurrency that works with blockchain technology like Bitcoin… only different. If Bitcoin is like a coin, NFT is like a unique digital certificate tied to a unique digital asset. An NFT is not the same as physical ownership of a physical item, but you CAN own the NFT of digital ownership records for physical assets.

Fungible and non-Fungible

Bitcoin is an FT, a fungible token. Like money, one unit of Bitcoin is worth the same as any other unit. This means you can have a digital wallet that holds X amount of Bitcoin, with each unit treated exactly the same. You cannot have a wallet that simply holds X amount of NFT.

Where each FT can be measured in units, number of Bitcoin, number of Dogecoin, etc., each NFT is unique. You can think of it like each NFT is its own currency, of which there is only ONE coin.

What do we own?

As outlined in the very awesome NFT Bible courtesy of OpenSea, “We have tons of digital stuff, we’ve just never really owned it.” This goes for the vast majority of digital products today. If you buy a song file, a digital movie, download a game, purchase an e-book, you do not own that product.

Each digital product you’ve ever purchased is only available to you so long as the store you purchased it from agrees to allow you to keep it. Instead of “owning” something in the way you’d think you own a physical product you’ve purchased at a store, buying a digital product is only really a licensing agreement.

Built-in standard rules

With an NFT, the rules of ownership are built in to each individual code. NFT code includes primitives (the simplest elements in the code) representing the following:

• Ownership
• Transfer
• Access Control
• Rules for display

How can I buy or sell?

You can head over to OpenSea.IO, click in the upper right-hand corner, and log in. You’ll need to set up an Ethereum wallet with MetaMask, more than likely, then you’ll be on your way! This is just the beginning.

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