WHAT IS AN NFT?
After the unprecedented and well-documented breakout of Bitcoin between 2014 and 2017, it has been a major concern of individuals in the cryptocurrency and trading space to remain ahead of the curve and identify the "next big thing" before it becomes public knowledge. Knowing this, it is no surprise that searches for Non-Fungible Token, or NFT, have skyrocketed in recent months.
In fact, it is almost entirely impossible that you, the reader, have not heard of or seen posts on social media relating to NFTs. The prevailing question in society now seems to be; what is an NFT?
As stated earlier, NFT stands for Non-Fungible Token. And no, Non-Fungible does not mean anything relating to fungi or related organisms. The word fungible is a legal term that is used to refer to goods that can be exchanged for one another during a transaction, and are indistinguishable from one another from an economic standpoint. The primary example of fungible goods is money, with five $1 notes having the same worth as one $5 note. This property is what is the driving force behind buying, selling and the general use of money.
However, NFTs are non-fungible, which means the opposite of what has just been defined. These tokens are not financially equal to each other and are equipped with distinctive codes which ensure they remain different from one another. As for it being a token, this simply means that it is a stand-in for something else, in this case, the unique metadata that distinguishes one NFT from another. Putting it concise terms, an NFT is a unique sequence of data, stored on a blockchain (kind of a record book, but digital) which can be bought or sold.
The quality of the art is not what gives an NFT its worth, but the data which owning a particular NFT gives you the right of possession. I know, this definition has raised more questions than it has given answers. Why is an NFT worth money? Why do people purchase NFTs for extravagant figures, like the Everydays: The First 5000 Days NFT that sold for $69.3 million? I will answer your questions in the next entry in this series.