NFT means Non-Fungible Token!!!
Now let us try to understand what this means.
“Fungible” means Replaceable. In detail, fungible means replaceable by another identical item or you can say mutually interchangeable. For example, you can interchange one note of five hundred takas with five notes of one hundred takas because these have equal market value. So, in this case, one note of five hundred takas is fungible.
Now think: What is non-fungible?
Things that are not mutually interchangeable or replaceable.
Example: The real photo of Monalisa by Leonardo da Vinci is not replaceable. Yes, you can create many copies of the photo but the original photo has a historic and emotional value in it. A copy cannot provide the same emotional value that the original photo of Monalisa can. The original copy is unique and invaluable. So, it is non-fungible.
Now, what is a token?
To understand that first, you need to understand what a digital asset is.
Digital assets are those assets that exist in digital format like digital art in photoshop or illustrator, a song as an mp3 file, a software code, an E-book, etc. If Leonardo da Vinci had created the photo of Monalisa with a digital drawing pad in illustrator or photoshop, that art would be a digital asset.
Now think: how to sell digital assets?
To sell a digital asset you have to create a copyrighted document or a certificate document where the information of the owner will be well written. Then the art can be handed over to the person who wants to buy the asset. This copyright or certificate of ownership is called a “Token”.
Actually, in the physical world, if we buy something, we get a cash voucher as proof of ownership. In the digital world, it is known as a token.
Now you know what a Non-Fungible Token (NFT) is.
In simple words, NFT is a digital certificate of ownership of an irreplaceable digital asset.
In formal definition: Non-Fungible Tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other.
Now let us think about why we need blockchain here.
If you go to a shop and buy a smartphone, and the shop owner does not want to give you a voucher, will you accept it? Or if the shop owner wants to give you a voucher without the brand name, will you accept it?
The answer is No. Because without a brand name the voucher cannot be verified. If you face any problem with the smartphone, the shop owner may not help you.
This means we need verification of vouchers or tokens. Here the use of Blockchain comes in the game of NFT. Blockchain keeps records of all NFTs. Information like who is the owner and who sold it etc. data are stored as an information block in the blockchain so all users of the chain can verify the token ownership.
This is the way blockchain helps in the process of NFT verification. The group verification of legitimacy is done by blockchain. Not only that, blockchain connect information blocks with cryptographic codes so an NFT owner can also sell the asset to another person that he/she had bought previously.
In this way, a billion-dollar market has been created around NFTs. Now people can buy and sell digital assets with the help of blockchain technology.
HRB Ranjan is the Founder and CEO of My Study Friend
