Unique digital identifier recorded on a blockchain
NFTs, or Non-Fungible Tokens, are unique digital assets that are stored on a blockchain and represent ownership or proof of authenticity for a specific digital item, such as art, music, videos, or even tweets3. They are non-interchangeable and cannot be replaced with something else, making each NFT unique. NFTs can be traded and sold, with ownership recorded on the blockchain5.NFTs work by using a blockchain, which is a decentralized digital ledger, to record and verify transactions. When an NFT is created, it is assigned a unique digital identifier that is stored on the blockchain. This identifier is linked to the digital asset, such as an image or video, and serves as proof of ownership and authenticity4.
History of NFTs
The history of NFTs dates back to 2017 when the first NFT was created by a developer named Kevin McCoy1. Since then, NFTs have gained popularity in various industries, including art, music, and gaming4. In 2021, NFT trading experienced a massive surge, with several art pieces selling for millions of dollars, and the market value reaching over $40 billion4.As for the future of NFTs, they are expected to continue evolving and finding new applications in various industries. Some potential uses include supporting the Play-to-Earn (P2E) gaming model, enabling true ownership of digital art, verifying memberships through “membership NFTs,” and supporting royalty systems4.
NFTs can be used for various purposes, including:
- Art and collectibles: NFTs have gained popularity in the art world, allowing artists to sell digital art pieces as unique, limited-edition items4.
- Music and videos: NFTs can be used to sell and distribute digital music and videos, with ownership and royalties tracked on the blockchain5.
- Virtual real estate: In virtual worlds like Decentraland, NFTs can represent parcels of land that can be bought, sold, and used to create content2.
- Event tickets and merchandise: NFTs can be used to sell and trade exclusive event tickets or merchandise, with ownership and authenticity verified on the blockchain2.
NFTs can be traded on various platforms and marketplaces, with some popular options including OpenSea, Rarible, and Nifty Gateway2. To trade NFTs, you typically need a digital wallet that supports NFTs and is filled with cryptocurrency, such as Ethereum, which is often used for NFT transactions2.NFT trading has experienced significant growth, with the market value increasing from $82 million in 2020 to $17 billion in 20215. However, the market has also faced criticism for its environmental impact due to the high energy usage associated with blockchain transactions, as well as concerns over copyright and the potential for scams5.
| Definition | A unique digital identifier that verifies ownership and authenticity of a digital asset, recorded on a blockchain. |
| Difference from cryptocurrencies | NFTs are uniquely identifiable and not interchangeable (non-fungible), unlike cryptocurrencies which are fungible. |
| Associated digital files | January 2009Can reference digital files such as artworks, photos, videos, and audio. |
