NFT stands for “Non-Fungible Token”. To explain what it is, it might be helpful to start with what it isn’t. The money in your wallet is fungible. You can exchange it for another of the same value. A 10-euro note is equal to two 5-euro banknotes. If something is irreplaceable, it means it has unique properties and cannot be exchanged. That’s NFT: a digital certificate of authenticity that “proves” that the file is original and unique. It uses blockchain technology, the same technology underlying cryptocurrencies such as Bitcoin. Its decentralized nature means that multiple networked computers are required to process it, making forgery or fraud theoretically impossible.
The role of NFTs is to create scarcity in the digital world, an environment that is difficult to secure. In the physical world, everything is simpler and more systematic. Edvard Munch’s painting The Scream sold for $120 million in 2012. But we managed to find a copy for sale for less than ten euros. There is a whole system of galleries, museums and critics whose function is to confirm the originality of a given work. In fact, this is one of the obsessions of the art world for centuries: guaranteeing authenticity and exclusivity.
In digital art, the distinction is more complicated. Files can be identical to the original and can be copied unlimitedly at no additional cost. This has always been an obstacle to making money in this art field. Now, thanks to the inviolable stamp of authenticity, monetization is easier, a new market is born, and it’s almost everywhere, with prices exploding.
If you are an artist and want to use this technology, simply register on NFT selling platforms (OpenSea is one of them), upload your work and decide how many certified copies you want to offer. When selling, the buyer, in addition to keeping the documents (which can be obtained for free by other means), records the transaction on the blockchain and has proof of ownership there.
a short glossary
A “non-fungible token” is a digital certificate issued to record the authenticity or ownership of a digital file or physical object). Due to its unique properties, it is tradable as it is impossible to copy or pirate. Use blockchain technology.
It is a decentralized database on thousands of computers. List of action logs organized by encrypted link blocks. Information cannot be changed once the operation is registered. It allows for transaction security, elimination of intermediaries and, in theory, greater transparency.
Blockchain is the technology behind cryptocurrencies. Today, there are hundreds. They are assets that can be used as a medium of exchange. As they gain popularity, more and more services accept them as a payment method.
Bitcoin was the first and most successful cryptocurrency. To this day, the identity of its creator remains unknown. The value of 1 bitcoin skyrocketed at the end of 2020, reaching 50,000 euros.
It is a contract that defines (and automatically applies) trading conditions. Today, securing cryptocurrency transactions, including buying and selling of NFTs, is critical.