What is an NFT
What is an NFT?
An NFT, or ‘non-fungible token’, is a unique, digital certificate that is stored on a blockchain and provides certain ownership rights in an asset, typically a digital one, such as a digital work of art. NFTs provide a powerful tool to establish and demonstrate ownership rights in the digital asset space where it is often hard to demonstrate such rights given how quickly and easily digital works can be replicated. NFTs are described as ‘non-fungible’ because each one is unique and of different value. This is in contrast to ‘fungible’ assets such as dollars or Bitcoin, which are identical and interchangeable.
An NFT is generated (or ‘minted’
) using a ‘smart contract’, which is computer code stored on a blockchain. The NFT includes a few different fields such as the NFT’s unique identifier (typically referred to as a ‘TokenID’); the blockchain wallet address of the current owner; and an identifier of where the digital work of art associated with the NFT may be found. Since blockchain transactions are fully transparent, anyone can view an NFT and its underlying information, including the blockchain address of the current owner and the blockchain address of each owner since the creation, or ‘minting’ of the NFT.
When a buyer purchases an NFT, they must have a digital wallet to receive, access and transfer an NFT. An NFT can be bought and sold like other pieces of property. These purchases and sales are effectuated by transferring the NFT through a blockchain transaction from the seller to the purchaser.
