In order to understand what NFTs are, you first need to know what it stands for. So, NFTs are Non- Fungible Tokens. Non-fungible is the opposite of fungible and in economics a fungible asset is something with units that can be readily interchanged, like money. For example, you can change a 20 EURO note for two 10 EURO notes without changing the value.
However, NFTs are non-fungible meaning they cannot be interchanged with something else. In fact, NFTs are one-of-a-kind assets in the digital world that can be bought and sold like any other properties such us, houses or paintings (ex. Mona Lisa painting) that are one of a kind.
In other words, NFTs are digital assets that represent a wide range of unique tangible and intangible items, from collectible sports cards to virtual real estate and even digital sneakers.
NFTs are indivisible meaning they cannot be divided like bitcoin and they can only exist exclusively as a whole item. Moreover, they are non-interoperable therefore CryptoPunks cannot be used as a character on the CryptoKitties game. This is also valid for collectibles such as sports cards, or trading cards such as a Blockchain Heroes card that cannot be played in the Gods Unchained trading-card game.
NFTs are also verifiable which is considered a strong benefit of storing historical ownership data on the blockchain since items such as digital artworks can be traced back to the original creator. This allows pieces to be authenticated without the need for third-party verification. Lastly, because as mentioned above all NFTs are stored on the blockchain via smart contracts, they cannot be replicated, removed or destroyed. Tokens are immutable which means gamers and collectors actually possess their NFTs and not the company that creates them. This is why they are indestructible, unlike buying things like music from iTunes, that you only purchase the license to listen to music or like Netflix, etc.
Most of the Tokens are built on the Ethereum token standards ERC-721 and ERC-1155. This enables developers to deploy NFTs and ensure their compatibility with the overall ecosystem and exchanges or wallets such as MetaMask and MyEtherWallet.
NFTs have become very popular with crypto users and companies in the crypto world. Just lately, it started getting attention from other companies and also social media. From November 2017 until today there has been a total spent on NFTs of about $200 million.
Artists are able to sell their work in digital form directly to a global audience of buyers without renting an auction house or a gallery. It is also allowing them to keep most of the profits to themselves and even address a bigger audience. Royalties can be monitored when an artist decides to program its work into digital work at the very beginning in order to continue earning from its “property” even when the next person decides to sell it to someone else. The percentages of sales the creator can get can be 10%, 20% or even 35% and the creator is the one who will determine that.
This is part of the artwork of Mike Winkelmann also known as Beeple that has just sold his NFT at a shocking price of $69.3 million making him the third-highest price achiever living artist. The most impressive part about the story is that Mike did not know what an NFT was five months ago, and if you are reading this you do not know what an NFT is until today!
The sale, at Christie’s, for the purely digital work was the strongest indication yet that NFTs, have taken the art market from auction houses and galleries to blockchain technology platforms.
As mentioned above, one of the main benefits of owning a non-fungible token like a Pokemon card or a special collectible card instead of a physical or tangible one is that it contains different information that makes it unique and one of a kind that cannot be interchanged with something else. Furthermore, this nature makes the creation of fake collectibles pointless since each NFT can be traced back to the original creator and can easily be recognized as a fake one.
NFTs are not like other cryptocurrencies that can be exchanged with one another. For example, you can exchange it coin for Ethereum, but you cannot exchange an NFT for another NFT. Guess why? Because there are no two identical NFTs even from those that exist on the same platform or collection and under the same creator.
Read or watch the most recent NFT that gave a return of 48,000% in few minutes. ALICE is the official token of the My Neighbor Alice game and only yesterday it became available for trading under different pairs on Binance. Just to paint the picture for you, if you had invested $1,000 you would have made $480,000 in just a few minutes!
This is a screenshot taken hours after the huge jump showing that the price dropped but was still up 29,800%.