Non-fungible tokens (NFTs) are digital assets that can represent ownership of a wide range of unique tangible and intangible items, from collectible sports cards to virtual real estate and even digital sneakers.
In many cases, the tokens themselves simply point to the location of the file, whether it be a GIF, piece of artwork or audio clip.
Below you will find some of the benefits that NFTs possess:
One of the main benefits of owning a digital collectible versus a physical collectible like a Pokémon card or rare minted coin is that each NFT contains distinguishing information that makes it both distinct from any other NFT and easily verifiable. This makes the creation and circulation of fake collectibles pointless because each item can be traced back to the original issuer.
Unlike regular cryptocurrencies, NFTs cannot be directly exchanged with one another. This is because no two NFTs are identical – even those that exist on the same platform, game or in the same collection. Think of them as festival tickets. Each ticket contains specific information including the purchaser’s name, the date of the event and the venue. This data makes it impossible for festival tickets to be traded with one another.
NFTs cannot be divided into smaller denominations like Bitcoin Satoshi’s. They exist exclusively as a whole item.
Because all NFT data is stored on the blockchain via smart contracts, each token cannot be destroyed, removed or replicated. Ownership of these tokens is also immutable, which means gamers and collectors actually possess their NFTs, not the companies that create them.
Another benefit of storing historical ownership data on the blockchain is that items such as digital artwork can be traced back to the original creator, which allows pieces to be authenticated without the need for third-party verification.
Are NFTs important?
NFTs have become hugely popular with crypto users and companies alike because of the way they revolutionized the gaming and collectibles space. Thanks to the advent of blockchain technology, gamers and collectors can become the immutable owners of in-game items and other unique assets as well as make money from them. For artists, being able to sell artwork in digital form directly to a global audience of buyers without using an auction house or gallery allows them to keep a significantly greater portion of the profits they make from sales.