A non-fungible token or NFT is a special type of token, a digital representation within a distributed ledger system or blockchain that can confer certain rights, ownership or active legal positions.
Tokens can have a different classification depending on certain properties conferred by the issuer, which varies depending on the purpose of the token. An NFT can represent real-world objects such as artwork, music, games and collections of any kind.
NFT stands for Non fungible to ken which in Italian means non-copyable token i.e. something unique that cannot be replaced by something else. Whoever buys a work tied to a non-fungible token does not buy the work itself, but simply the possibility of proving a right to the work, guaranteed through a smart contract.
It all starts with a digital version of the artwork. Typically, a digital photo or filmed and digitally saved documentation of it is used. Importantly, whoever owns the digital document can easily calculate itshash (a cryptographic algorithm used in the blockchain network that combines digits and numbers), whereas it is virtually impossible for anyone else to reconstruct a digital document from a hash. The NFT internally keeps track of the hash’s sales, so that it is possible to trace the hash’s passage from hand to hand, all the way back to its creator, thus proving its possession. This mechanism thus provides proof of authenticity and, at the same time, proof of ownership of the work.
Some of the currently most popular protocols or tokens in nft according to the major platforms in the sector, besides Ethereum are: Theta, Tezos, Chiliz, Rarible, Polkadot.
Sowhat is an nftused for? Mainly to create verifiable digital scarcity, e.g. for a collector’s item, a digital work of art or even the right of ownership or exploitation of a photo, a video, a song. One of the first sectors in the world to use nfts was the art market. In 2014 Kevin Mccoy created the first nft then auctioned in 2021 for over $1.4 million, other examples of valuable nfts were the crypto punks, 10,000 small 8-bit style characters, each one different from the other, considered to be one of the first art forms on blockchain, also of note was the cryptokitties project, a popular collectible game consisting of small unique kittens that raised over 12 million investment.
Kings of Leon on 5 March 2021 released When You See Yourself, the first music album also sold through NFT. Also in 2021, taking advantage of the hype around the industry, more and more platforms and artists launched their marketplaces or their works in nft, among many we can mention: Binance, Crypto.com, Opensea, Achille Lauro, Ema stokholma.
In essence, NFTs are like collector’s items in digital format. Instead of receiving an actual oil painting to hang on a wall, the buyer buys a digital file. In addition, he/she acquires exclusive ownership rights. NFTs can only have one owner at a time. The unique data of NFTs makes it easy to verify their ownership and to transfer tokens from one owner to another. The owner or creator can also store specific information within them. For instance, artists can initial their artwork by including their signature in the metadata of an NFT.