Categories: Technology
| On 7 months ago

What are NFTs, How do they work, What makes them so popular?

By Aswin Kumar

What are NFTs?

Non-Fungible Tokens: One of a Kind Assets for Collectibles and Rare Items. A non-fungible token (NFT) is a cryptocurrency token that is indivisible and unique.

Artist Mike Winkelmann, also known as Beeple, sold one of his works through non-fungible tokens or NFTs for $6.6 million, while Chris Torres, creator of Nyan Cat, a famous internet meme, sold his viral GIF for 300 ethereum or around $600,000. 

NFTs are unique tokens or digital assets that generate value because of their uniqueness.

For example, two individuals can exchange their bitcoins of the same value but they can’t exchange their NFTs they are more like art piece which make them unique in nature.

How do they work?

“When someone transfers one NFT to someone else, the code, which represents the NFT, also gets transferred to the other person on the blockchain. This makes sure that one can check on the blockchain who owns the NFT. When an NFT is created it is put up on the blockchain and is time-stamped, therefore it makes digital ownership very simple and easy to identify,” said Nischal Shetty, chief executive officer of WazirX.

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Why are they so popular?

NFTs are popular among gamers and collectors due to the features which make them unique and more reliable.

Key factors which make them unique from crypto coins:

  • They are not interchangeable
  • They are not divisible like Bitcoins into smaller denominations
  • They are Indestructible NFT data is stored on the blockchain via smart contracts, each token cannot be destroyed, removed, or replicated.
  • They can be traced back to verify the original creator.

Conclusion

Billionaire investor Mark Cuban has been vocal about his investment in digital tokens like NFTs.

Actress Lindsay Lohan, the “Mean Girls” actress sold an NFT for $59,000 in February and posted a $15,000 Daft Punk NFT on the trading platform Rarible Sunday.

Investors have expressed interest in digital assets in the past and NTFs can be more popular in the coming years due to it’s distinguishing features.

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Aswin Kumar

A creative science nerd! Buy me a coffee: buymeacoffee.com/aswinkumar

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