NFTs Non Fungible Tokens defined in 2023. What is an NFT in simple terms?
NFTs can be thought of as digital pieces of papers. A regular piece of paper in real life can be used for so many different things. For example, a piece of paper can be used to write and IOU (checks). A piece of paper can be used to draw a picture that can be sold. A piece of paper can be used to print a birth certificate or university diploma. A piece of paper can be used to make a passport to travel the world. As you can see, a piece of paper is very versatile. NFTs can be compared to a piece of paper. NFTs are digital and will last as long as the blockchain survives. NFTs can do many things a piece of paper can do. NFTs can work as a concert ticket. NFTs can be used to show ownership of a house. NFTs can store art work, music, and messages. NFTs are very good at storing transactions (aka contracts). If party A gives something to party B in exchange for some other NFT, then these transactions will be tied to the NFTs. NFTs can also be thought of as ownership of a company, project, organization. NFTs can be used as a membership. NFTs can be used for voting power. NFTs and crypto work hand in hand. They need each other.
Let's break down the different types of general items available today to help us better understand NFTs.
Fungible Physical items:
Cash, Coins, Fiat, Gold, Casino Chips
Fungible Digital items:
Bitcoin, Ethereum, Loyalty Points
Non Fungible Physical Items: (assets that cannot be substituted)
Famous Painting, House
Non Fungible Digital Item:
Video game skin, Trademark, Cryptokitty
What is a Token in Non Fungible Token?
Token:
Digital certificate stored on a secure database called a blockchain
NFTS are Digital asset publicly verifiable intellectual property authenticated on the blockchain
Types of NFTS:
Virtual land
In Game Assets
Collectables (Art)
Profile Pictures (PFPs)
What is not an NFT:
Currently in game assets such as skins, weapons, etc, in games such as Fort Night or League of Legends are not NFTs. They are digital assets. But currently cannot be uniquely identified and resold on the open market.
Since NFTs can be uniquely identified, they can also be purchased on marketplaces such as opensea.io.