What are Non-Fungible Tokens (NFT) and why are you interested in knowing about them? By Karupanocitizen

A few days ago while doing my usual walk on the net, I prefer to surf the internet instead of jogging in the street ... uhh! Is that why I'm a little chubby? xD well as I was saying ... while exercising my google browser, I came across a piece of news that caught my attention: Spanish writer tokenizes her first novel and is now an NFT, The first thing that came to mind was, why am I wasting my time instead of writing? And then, what is an NFT? What is it for?

I had already read a little about tokens, I also knew the non-fungibility feature of some things, but finding both in the same term, caught my attention. If, like me, you want to learn a little more about our wonderful blockchain universe and the infinite possibilities it offers, stay with me and let's learn together about Non-Fungible Tokens (NFT).

A little theory

If I already know that the theory is a bit annoying at times, I understand them, but my experience tells me that to understand something it is always good to know the root of the matter, where it comes from. In this case, I will not bore you too much, I just want to review two concepts that are very important to understand the rest of the article: token and non-fungible.

A token is any tangible or intangible element (that can be touched or not) that represents the intention between two parties to exchange a certain good or service but that is not a legal tender, very academic? Let's go as an example.

^{Image taken from www.wie.et}

When you went to Vegas (what happens in Vegas stays in Vegas), you exchanged your dollars for gambling chips, right?. That's a token. In this case, it is tangible and only has value inside the casino, if you want to spend the money won outside it, you will have to exchange it again for dollars, which is the legal tender.

Now imagine that we are not talking about a casino, but about a blockchain. Tokens are created within it to pay for the services that are generated and can also be exchanged for other legal tender currencies (so-called FIAT currencies).

We go with the second element, non-fungibility. Something non-fungible is something that has unique and particular characteristics that identify it from the rest of things, so when exchanging it you cannot get something identical for it.

To understand the concept a little better, let's compare it with its antonym (opposite). Goodwill is fungible when it can be exchanged for another good that has the same characteristics, so it can be established that they have the same value, one can replace the other since they have the same qualities.

^{Image taken from diarioinforme.com}

Now let's see it with examples, the coins or bills are fungible, we can deliver them and receive in exchange other coins or bills that represent the same value, without having to be the same coins or bills that we initially delivered. But, the painting "La Gioconda or La Mona Lisa" by Da Vinci is unique, there is no other like it, since the artist made only one copy, it cannot be exchanged for another "Mona Lisa" since it does not exist. This is what makes this painting a non-expendable good.

What is a Non-Fungible Token (NFT)?

Non-fungible token (NFT) for its acronym in English, is a type of cryptographic token of a blockchain that represents an asset or unique good. It can be entirely digitally created or it can be tokenized versions of real-world goods or things.

What?, explains better that I did not understand.

In simple terms, an NFT is a digital asset different from any other, even those generated within the same blockchain. Imagine that we could create assets similar to bitcoin, but that we added an identifier or unique characteristic to each unit, this would turn them into digital goods different from the rest, not fungible, an NFT.

Another way to see and understand NFTs is to see them as digital property titles, that is, an element that identifies itself from others because they carry unique information and characteristics that allow establishing that they are the "originals" about several copies. that can be generated from it.

Since NFTs are not interchangeable with each other, they can function as proof of authenticity and ownership within the digital realm.

From one point of view, NFTs work and are transferred taking advantage of Ethereum's Smart Contract technology. These digital assets evolved from the ERC-721 standard, which unlike the usual protocol of Smart Contracts that allows them to be divisible and interchangeable (what is necessary to create useful cryptocurrencies).

What can learning about NFTs do for us?

In a digital world like the one, we live in, in which the blockchain has become an element of economic innovation, exceeding in many cases its technological potential, managing knowledge about NFTs opens up a range of investment options and even protection. of our digital assets.

Here, we are talking, in short, and it should be noted, of collector's items. And the disruptive thing is that they are now digital files.

If we take into account that in recent days a video clip was sold for 200 thousand dollars, a tweet for 2.5 million dollars or a work of digital art was auctioned for 69.3 million dollars, all of them converted into NFT, it is impossible not to turn your gaze to learn a little about this novelty.

Technically, anyone with the necessary knowledge and with a concrete value proposition could create their own NFTs and market them to interested people. In this way, two large groups of beneficiaries of the NFTs are born:

• Issuers or creators: they are the people responsible for creating the NFTs, either of digital goods or physical goods, in this group we have, for example, artists, content creators, people interested in putting goods up for sale, among others.

• Buyers or collectors: they are customers of the first, that is, people interested in acquiring the NFTs, these can be admirers, fans, collectors, or other interested public.

It should be taken into account that as collectibles, NFTs can represent an investment, such as with works of art or jewelry, for example, whose value can increase over the years.

The impact of the latest negotiations with Non-Fungible Tokens has been such that many experts in the area and investors have publicly expressed the great interest that this type of business arouses in them.

^{Image taken from cryptogazette.com}

Mark Cuban, technology investor and owner of the Mavericks, has been one of the most talked about the rise of the NFT. For him, it is "a generational change that now gives value to a digital asset just as we have up to now given it to any physical value that we consider to be unique or different."

^{Image taken from techcrunch.com}

Analyst Chris Dixon has also written on investor Andreessen Horowitz's blog that NFTs have the potential to "change the relationship of digital content creators to their creations." Dixon refers to the fact that until now all content creation had to be linked to a platform, such as YouTube, which interposes an algorithm and monetization on that creation and the public itself. And now, a YouTuber, but also a digital artist or designer can sell their work directly to their audience in a much more exclusive way thanks to this new concept.

This to cite two particular cases, but interest continues to grow exponentially. That is why I will continue to develop this theme in my next publications.

If you want to complement this information or ask me to develop a particular point on the subject of this publication, do not hesitate to let me know in the comments, for me it will be a pleasure to read your comments.

We keep reading!