What is NFT: concept and features

NFT (Non Fungible Token, which also means “non-interchangeable token”) is a unique certificate in digital form.

To understand what NFT is, it is worth considering its distinctive features in more detail. It is stored in the blockchain, ensures the uniqueness of the item and grants its owner exclusive rights to this item. This concept comes from the cryptocurrency sphere.

NFT cannot be secretly substituted or divided into parts. This technology allows you to secure ownership rights to a variety of unique objects, for example:

  • real estate;
  • paintings;
  • artifacts in online computer games.

Any entry in the blockchain is a token. Like coins of equal denomination, all tokens in the open blockchain can be used as an equivalent substitute for each other. For example, bitcoin mined ten years ago costs the same as bitcoin mined today. However, the NFT technology operates on a different principle. The NFT cannot be replaced with another token while preserving the entity and value of the object.

Like cryptocurrency, NFT is created in a blockchain that serves as a database in which all transactions are recorded. Thanks to the blockchain, you can verify the authenticity of the NFT. This technology makes it possible for any user to study the history of a specific non-interchangeable token through the blockchain.

By purchasing an NFT, the user becomes the owner of a digital certificate for the work, which at the same time remains in perpetual storage (IPFS). This certificate, in fact, is a string of program code confirming the fact of ownership of the original object by the owner of the token. NFT is likened to a work of painting, the owner of which may be a private person, an art gallery or a museum, but the audience has the opportunity to look at it at an exhibition or in a catalog.

NFT is sold in marketplaces in the global network that provide services on the same principle as Wildberries or AliExpress. The creators of NFT place them on trading platforms and expect purchase offers.

A non-interchangeable token can be created by anyone. To do this, follow these steps:

  • create any digital object (image, audio recording, etc.);
  • register on a special trading platform on the World Wide Web;
  • upload an object with a description and cost to the selected platform.

At the same time, on many platforms, it is necessary to pay a commission fee for creating an NFT, that is, a record in the blockchain. Despite the simplicity of creating non-interchangeable tokens, only a few people manage to sell them at high prices. NFTs created by celebrities are very popular.