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What is an NFT in simple terms?

Over the past few years, many have undoubtedly come across the term "NFT," which circulates the internet and has led to scratching of the head for many people. What is an NFT, and why is everyone talking about it? For this post, we are going to get into the NFTs explained simply and understandably for beginners.

What is an NFT?

Non-fungible tokens, or NFTs for short, are unique cryptographic tokens on a blockchain that are not replicable. Unlike other similar protocols, non-fungible tokens as a whole create a totally distinct class of crypto assets, different from the “fungible” class eg Bitcoin and dollar bills) where all tokens are of equal value. As each one is unique, NFTs can be used to certify the ownership of digital items like recordings, art pieces, virtual real estate, and virtual pets.

NFT stands for Non-Fungible. Let's break that down:

  • Non-Fungible: This is an item of the exact same caliber, not replaceable along with something else. As an example, a painting by a famous artist is a non-fungible item as it cannot be exchanged with another painting to offer the same value.
  • Token: In cryptocurrency world, token is a unit of value. Currencies are different in that they only exist within the digital space (on blockchains) and do not have any physical tokens.

When we combine these two notions, an NFT is simply a digital deed for something unique. This could involve a digital artwork, a video file, a tweet, and even a virtual real estate property in a blockchain game. These digital assets are authenticated using NFTs which certify ownership of the asset and makes sure that it cannot be replicated, forged, or sold by anyone other than the person owning it, in a safe and transparent way.

How Do NFTs Work?

NFTs are built on blockchain technology, an open and decentralized digital ledger first developed as the infrastructure for Bitcoin and Ethereum. An NFT is parked on to a blockchain thus, ensuring to have a trustworthy and irreversible proof of ownership and an exhaustively auditable trail right back to its creation.

If a person buys an NFT, he attaches a sort of tag to it in the distributed ledger, and he says that I bought an NFT at such a time, from this owner, at such a price. So a digital token represents current ownership and also has a historical ownership record which can be verified on the blockchain and are a critical way to establish authenticity and value of a digital asset.

A characteristic of NFTs is, among others, the opportunity to include metadata, which contains information, both artistic and non-artistic, about the digital asset represented by an NFT. An NFT representing a digital artwork would have information such as the artist, the date of creation and whether it has any copyrights or licenses towards it.

Why Do NFTs Matter?

Support fundamental change in the creative process by analyzing the potential impacts of NFTs on creatives, collectors and the over digital economy NFTs are significant because;

  1. Empowering Creators: NFTs offer a breakthrough by enabling writers, artists, musicians, and all creators to monetize their creations in a radically new way. Accordingly, creators can now tokenize their creations and sell directly to fans without the traditional need for galleries or record labels.
  2. Ownership and Authenticity: NFTs are the ultimate solution to the age-old question of ownership and authenticity in the digital domain. In this regard, traditional digital assets can be easily replicated and distributed without any control. NFTs provide a unique way to prove ownership and therefore it is helpful for creators to establish intellectual property rights.
  3. Investment Opportunities: For some, NFTs are the digital equivalent to physical investments like fine art or vintage cars. NFTs can be long-term investments too, just like rare physical items might find appreciation in the future as a consequence of their rarity.
  4. Cultural Significance: NFTs are unlocking a dialogue about what art, ownership, and value mean in the 21st century. The more attention NFTs attract, the more they will shift the way we think about valuable and poignant cultural objects.


To recap, NFTs are authentic digital certificates of ownership representing unique digital item and stored on a blockchain. This gives power to creators, clarifies ownership, raises capital, and messes with the traditional definitions of value and rights in the digital age.

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