NFTs, or non-fungible tokens, are cryptographic assets on the blockchain that include unique identification codes and metadata that identify them from one another. They cannot be traded or exchanged for equivalency, unlike cryptocurrencies. This is in contrast to fungible tokens, such as cryptocurrencies, which are identical to one another and hence can be used as a means of exchange.
WHAT YOU NEED TO KNOW
- NFTs are unique cryptographic tokens that exist on a blockchain and cannot be replicated.
- NFTs can be used to represent real-world items like artwork and real-estate.
- “Tokenizing” these real-world tangible assets allows them to be bought, sold, and traded more efficiently while reducing the probability of fraud.
- NFTs can also be used to represent individuals’ identities, property rights, and more.
Where can I get NFTs?
Because many NFTs can only be acquired with Ether, the first step is usually to acquire some of this cryptocurrency and store it in a digital wallet. After that, you can buy NFTs from any of the online NFT marketplaces, such as OpenSea, Rarible, or SuperRare.
Is it safe to use non-fungible tokens?
Non-fungible tokens, which work on the same blockchain as cryptocurrencies, are generally safe. NFTs are difficult, but not impossible, to hack due to the distributed nature of blockchains. One security issue with NFTs is that if the platform hosting the NFT goes out of business, you may lose access to your non-fungible token.
What are NFTs and how do they work?
Most NFTs are, at a high level, part of the Ethereum blockchain. Ethereum, like bitcoin and dogecoin, is a cryptocurrency, but its blockchain also enables these NFTs, which store additional information that allows them to function differently from, say, an ETH coin. It’s worth mentioning that various blockchains can use NFTs in their own ways. (Some have already done so.)
What should you buy in the NFT supermarket?
NFTs can be anything digital (drawings, music, even your brain being downloaded and transformed into an AI), but the current buzz is focused on exploiting the technology to sell digital art.
Do you mean people paying for my excellent tweets?
I don’t believe anyone will be able to stop you, but that isn’t what I meant. A lot of the discussion revolves around NFTs as a digital evolution of fine art collecting.
(As a side note, we were attempting to think of something so ridiculous that it wouldn’t be a real thing when we came up with the sentence “purchasing my excellent tweets.”) So, of course, shortly after we published the report, Twitter’s founder sold one for slightly under $3 million.)