OK, so what is an NFT?
An NFT is a unique unit of data stored and tracked on a blockchain.
I thought an NFT was a piece of digital art.
Well, that unit of data I mentioned can be used to represent ownership of digital art, but it can be used to represent ownership of many other things including both digital and physical assets.
OK, can you explain the blockchain bit?
You can think of a blockchain like a huge global database that nobody owns. Rather than being stored on one computer, a blockchain distributes the information across computers all over the world – so if one computer shuts down or is compromised, that data still exists on hundreds of others. This makes a blockchain a great way of tracking information.
Why is that useful for NFTs?
The data stored on a blockchain about an asset can act as a certificate of authenticity and ownership. Once an object is entered on the blockchain, all transactions that transfer ownership can be recorded and all previous transactions can be examined.
What about all of the ‘fungi’ stuff?
So, I always like to leave this till last because I think the literal definition of NFTs is pretty unhelpful. NFT stands for ‘non fungible token’. Imagine that, defining a thing based on what it is not rather than what it is! Anyway, fungible means interchangeable, so non-fungible is just a way of expressing uniqueness. A token is something that represents something else, so this just refers to the fact that the entry on the blockchain represents the digital or physical asset.
