Non-fungible tokens, what are they? You might be more familiar with its acronym ‘NFT’. These three letters have been the subject of several Reddit forums and Telegram group chats in 2021, as we have seen the mindboggling profits which some have been made through its auctioning. From Jack Dorsey’s $2.9 million tweet to pixilated digital art, which would seem to be void of intrinsic value, being auctioned for hundreds of thousands of dollars. It seems that we are going through a digital revolution and wealth transfer as, we are seeing, what had initially appeared as ‘digital memes’, now becoming an actual, clear means of acquiring great financial wealth and a means of income.

In order to understand what NFT’s are, what is their use case is and where they will be in the future, first of all, let us break down what an NFT is. A fungible token is an asset that can be substituted and is able to retain its value such, as the US dollar or Bitcoin, whereas a non-fungible token on the other hand is an asset which is not able to be substituted and contains unique attributes, for. If this was traded for a different card, you would have something completely different. This is fundamentally how NFT’s operate, they have their own Digital ID, which is traceable back to the original owner as well as the buyer.

At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like Bitcoin or Dogecoin (the ‘Meme’ crypto coin which is widely associated with Elon Musk). However, its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs.

The majority of NFT’s are part of the Ethereum blockchain and contain a unique digital token. This is important because this then eradicates issues of fake replicas of digital art which could circulate and be sold on the market because each NFT has its own distinguishing information making it distinct and easily verifiable, allowing each item traced to the original issuer. NFT’s traceability has provided a unique opportunity for digital art to be sold online with further security measures in place, thereby providing protection for NFT fanatics who could be at the mercy of fraudulent criminals.

A further question in the air is, what does the future hold for NFT’s? So far, we have seen NFT’s for digital art, game tokens, and famous tweets, but is that all? Are NFT’s going to be a digital craze that will eventually die off? Though some ‘NFT pessimists may believe that this may be the case, I have a contrary view, as one who sees the uncapped potential which can be explored through NFT’s which can influence and impact other sectors such as the sports industry, as we are already seeing football fan tokens and NBA collectibles of iconic moments. However, it does not stop here, as there are developments in the exploration of NFT’s being used for Real Estate however this is still in early development but there is certainly undeniable potential to be explored.

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