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What are NFTs?

NFT stands for Non-Fungible Token. “Non-fungible” simply means that it is unique and not replaceable or interchangeable with anything else.  On the other hand, physical money and cryptocurrencies are “fungible,” meaning they can be traded or exchanged for one another. They’re also equal in value—one pound is always worth another pound; one Bitcoin is always equal to another Bitcoin.  However, a rare, one-of-a-kind collector’s item would be non-fungible, as there is no replacement of it available. NFTs are different. Each has a digital signature that makes it impossible for NFTs to be exchanged for or equal to one another (hence, non-fungible).

More technically, an NFT is a secure, blockchain-based certificate that represents an entitlement its owner has to a (usually) digital or physical asset (e.g. artwork) or licence and permit for something. Each NFT has a unique signature that verifies authenticity and any transactions related to it — who created it, who owns it, who sold it and for how much, etc.

People think of NFTs as some funky digital image, however NFTs are much more than that; NFTs have great potential and can represent various assets. Non-fungible tokens are designed to be i) cryptographically verifiable, ii) unique or scarce and iii) easily transferable. These features allow the tokenisation of various non-fungible assets. As individual tokens, NFTs store valuable information and connection to an asset. Because they hold a value primarily set by the market and demand, they can be bought and sold just like other physical types of art. NFTs’ unique data makes it easy to verify and validate their ownership and the transfer of tokens between owners.

Essentially, NFTs are like physical collector’s items, only digital. So instead of getting an actual oil painting to hang on the wall, the buyer gets a digital file instead.

They also get exclusive ownership rights. NFTs can have only one owner at a time. NFTs’ unique data makes it easy to verify their ownership and transfer tokens between owners. The owner or creator can also store specific information inside them. For instance, artists can sign their artwork by including their signature in an NFT’s metadata.

In our other miniblogs, we will discuss the use cases of NFTs, how they work, the minting process and other interesting bits of information regarding NFTs.

To get involved in creating a faith-inspired NFT then check out Funoon on Funoon.io.

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