NFT: what is it and what is it for?


NFT: what is it and what is it for?

New technologies are blurring the boundaries between the physical world and the digital universe, opening the way to new communication channels, ways of making art and investment strategies. The blockchain and smart contracts are causing a real revolution in many sectors and already allow the creation and sale of unique works that are reaching incredible value .

What are NFTs or Non-Fungible Tokens ?

NFT stands for Non-Fungible Token ; that is, a non-fungible token. A non-fungible good is irreplaceable, so it cannot be exchanged, while tokens are units of value that are assigned to a business model. That means that NFTs are unique and indivisible digital assets, which cannot be modified or exchanged for others because no two NFTs are equivalent .

An NFT would be like a work of art since, although copies can be made, they will never have the same value as the original. In fact, many NFTs are focused on the world of collecting, although many people acquire them as an investment, hoping that their value will grow in the future.

How do NFTs work?

NFTs work using blockchain technology  , the same technology that cryptocurrencies are based on. The blockchain operates through a decentralized computer network, with linked blocks or nodes that use cryptography. Each block links to the previous and subsequent ones, containing the dates and data of the transactions, so that this information cannot be altered or modified.

Each NFT is assigned a kind of digital certificate of authenticity , metadata that cannot be modified and that guarantees its legitimacy. They also record the initial value and all acquisitions or transactions made, as well as its original author, who has sold and bought it, and the current owner.

Therefore, blockchain technology allows verifying the authenticity of the NFT by displaying its history . In fact, an NFT is stored on the blockchain by means of a smart contract , which means that it cannot be destroyed, deleted or replicated.

Most NFTs are based on the standards of the Ethereum network and its blockchain . This technology allows you to operate with them and facilitates their purchase and sale using wallets that also work with Ethereum. However, as they are unique works, there is no such active trading market as that of digital currencies.

The most emblematic NFT examples of recent times

NFTs are having a lot of success in the field of art . Even the historic auction house Christie’s has begun to dabble in what is already known as crypto art. In March 2021, it auctioned off a purely digital work by artist Mike Winkelmann, better known as Beeple, worth $69 million.

Another of the most interesting NFT examples comes from Banksy . His painting Of him Morons (White) was initially exhibited in an art gallery before being cremated, however it was later turned into an NFT which sold for nearly $400,000.

The interest in NFTs is so great that it has already spread to other sectors. In 2021, the first tweet in history , by Jack Dorsey, the founder of said social network, was auctioned. That NFT was worth nearly $3 million.

The Economist recently also coined its first NFT, the cover of its September 21 issue exploring the world of decentralized finance. After auctioning it, it earned more than $279,000.

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