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Non-Fungible Tokens (NFTs) : A New Horizon in Digital Assets

Non-Fungible Tokens, or NFTs for short, are a type of digital asset built on blockchain technology. These assets are unique and cannot be exchanged with each other. Simply put, each NFT is a digital certificate that proves ownership of a specific digital file or physical object.

How are NFTs different from ordinary digital files?

Usually, a digital file (such as an image, song, or video) can be easily copied and has no single ownership, but an NFT solves this problem. The main feature of an NFT is that it is "non-fungible" or non-exchangeable.

Difference between non-fungible and fungible

Fungible : A 1000 rupee note is equal to another 1000 rupee note, you can take one note in exchange for another note without any change in value. This also applies to cryptocurrencies—one bitcoin is equal to another bitcoin.

Non-Fungible : Each NFT is unique and has its own characteristics, the ownership information of an NFT is recorded on the blockchain. Therefore, taking one NFT for another NFT may result in a difference in value or characteristics. Suppose, there is only one original copy of the painting 'Mona Lisa' painted by Leonardo da Vinci, converting its digital version into an NFT also creates a specific and verifiable ownership of that digital file.

How does NFT work?

The main basis of NFT is blockchain technology, most NFTs are created on the Ethereum blockchain. The process of creating an NFT is called “minting,” and when a digital file is minted, it creates a unique token.

Unique ID : Each token has a specific ID number, which distinguishes it from others.

Ownership information : Who currently owns this NFT, that information is recorded on the blockchain.

Metadata : It contains a link or description of the file, for example: it is an NFT of a photo or video.
When an NFT is bought or sold, this ownership information is updated on the blockchain, this information is public and immutable so it cannot be forged.

NFT Uses and Markets

The biggest use of NFTs is in the field of art and digital collectibles, with digital artists selling their work as NFTs. Some popular examples include:—

Digital Art : Famous auction houses like Christie's are selling digital artwork as NFTs. For example, a digital collage by artist Beeple sold for a record price.

Gaming : In the gaming world, players can own their in-game items (e.g. skins, weapons) as NFTs and sell them to other players.

Music and Video : Music artists can release their songs or albums as NFTs, which can be sold directly to their fans. Platforms like NBA Top Shot sell videos of famous basketball game moments as NFTs.

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There are some specific marketplaces for buying and selling NFTs, such as: OpenSea, Rarible and SuperRare, on these platforms users buy and sell NFTs using cryptocurrency. However, there are also some risks in the NFT market, its price is very volatile and often has no real basis behind it. Therefore, one should do thorough research before investing in it, NFT has opened a new horizon of digital ownership and it is expected to be used in many new areas in the future. Today's discussion concludes here. I hope you've found it interesting. Please share your thoughts on today's topic. Prayers for everyone. May everyone be well. Amen.

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