What is an Non Fungible Token (NFT)?
In economics, a fungible asset is something with units that can be readily interchanged - like money.
With money, you can swap a $10 note for two $5 notes and it will have the same value.
However, if something is non-fungible, this is impossible. A non fungible item has unique properties meaning it can't be interchanged with something else.
It could be a house, or a painting such as the Mona Lisa (which is one of a kind). You can take a photo of the painting or buy a print but these will only ever be copies of the original painting, they have no value.
NFTs are "one-of-a-kind" assets in the digital world that can be bought and sold like any other piece of property, but which have no tangible form of their own.
The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
How Do They Work?
Traditional works of art such as paintings are valuable precisely because they are one of a kind.
But digital files can be easily and endlessly duplicated. NFT’s make it possible to track and trace the owner of a digital file (regardless of how many copies there are).
With NFTs, artwork can be "tokenised" to create a digital certificate of ownership that can be bought and sold.
As with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain.
The records cannot be forged because the ledger is maintained by thousands of computers around the world.
NFTs can also contain smart contracts that may give the artist, for example, a cut of any future sale of the NFT token.
The Wealth Gap Warning
For our premium members we don’t need to now continue to delve into NFTs a basic google from here on and you’ll find all the hype and fluff and fun you want.
Our value to you comes by way of pointing out factors that the market is missing….