What’s Nifty About an NFT?
An NFT, or non-fungible token, is a unique digital asset stored as a cryptographic unit of data on a blockchain’s digital ledger. Fancifully termed nifty, NFTs are representatives of anything authentic and valuable that man can rank as an investible collector’s item, beginning from photos, videos, audios, to collectibles such as cryptoart, sportscards, paintings, music, other artworks, etc. Being registered on a blockchain gives the owner proof of ownership while copyright must first be obtained by non-owners to possess a copy thereof.
As such and one-of-a-kind as they are, NFTs are not interchangeable and divisible (hence, non-fungible) unlike bitcoins to satoshis, or a dollar to a penny, which can be broken but still equal to another bitcoin or another dollar, and so, therefore, are fungible. From humble beginnings, NFTs were catapulted to mind-blowing proportions tripling their market value to over $250 million in 2020, and NFT spending rocketed to $200 million in Q1 of 2021 alone.
It enabled the tokenization of tangible, real-world assets by converting them to digital forms and virtually storing them together with pertinent data regarding ownership details, and the artist/creator’s signature which can be verified on a blockchain ledger.
Using Ethereum’s ERC-1155 standard that reduces transaction and storage costs, allows different NFTs to be batched into a single contract, thereby removing intermediaries. This makes an NFT identity unique and non-transferable, creating new markets in the process.