Non-fungible Assets Definition
Non-fungible assets, more commonly known as non-fungible tokens (NFTs), represent a unique item or piece of content on a blockchain network. Unlike fungible tokens such as Bitcoin, which are interchangeable for one another, NFTs have distinguishing characteristics that empower individual authentication and usage rights, rendering them inimitable and individual.
Non-fungible Assets Key Points
- Non-fungible assets are digital tokens that represent a unique item or piece of content.
- They run on blockchain networks, helping authenticate the originality of the individual token.
- Contrary to fungible tokens such as Bitcoin, they cannot be exchanged on a like-for-like basis.
- NFTs have given art, music, gaming, real estate industries, and more, a new method of certification plus direct and decentralized interaction with customers.
What are Non-fungible Assets?
Non-fungible assets are a novel type of digital asset. Created using blockchain technology, they represent individual items or elements, such as a digital piece of art, a tweet, music album, or some virtual real estate in a digital ecosystem. What sets these assets apart is that they have unique characteristics, enabling each token to prove its individuality and establish its distinct value.
Why should you care about Non-fungible Assets?
NFTs have gained considerable attention due to their potential to revolutionize multiple industries. They offer a new way to confirm the ownership of unique items in the digital world, which has widespread implications for industries like art, music, gaming, real estate, and more. For example, artists can create digital artworks as NFTs, sell them directly to consumers and even program royalties so that they receive a portion of the sales each time the artwork is resold – maintaining their rights and earning potential in an otherwise ‘copy-paste’ digital world.
How does a Non-fungible Asset work?
The technology underpinning NFTs is a standard called ERC721, built on the Ethereum blockchain. This standard specifies a minimum interface a smart contract must implement to manage, trade, and own unique tokens securely. Makers lay down the rules for their NFTs, dictating how they can be transferred or sold, or what happens when it’s used, thus managing their uniqueness.
Where are Non-fungible Assets used?
Non-fungible assets have a wide variety of use cases. They have gained popularity in digital art, where they offer a way for artists to sell work directly to audiences without the need for galleries or auction houses. They are also used in the gaming industry, where players can own unique in-game items. Other uses include digital collectibles, virtual real estate, and even tokenizing real-world assets.
When did Non-fungible Assets become popular?
The concept of NFTs became popular in 2017 with the launch of CryptoKitties, a game on the Ethereum blockchain where players can purchase, collect, and breed digital cats. Each CryptoKitty is a non-fungible asset, unique from every other CryptoKitty. However, NFTs truly entered mainstream discourse in 2020, and especially in early 2021, when several high-profile digital artworks including one piece by artist Beeple sold for millions of dollars.
