With this article, we intend to shed some light on what NFTs or Non-Fungible Tokens are all about and how they differ from any other form of digital media.
Traditionally, users have not been able to claim ownership over digital goods inside virtual arenas, like games or social platforms, as all the virtual assets belonged to the developers, under strict laws.
Yet, users were being charged funds for the right to essentially borrow these items within the confines of the particular virtual arena they found themselves in.
The digital asset could not be removed from this environment, nor sold for profit, when it was no longer of any use.
The introduction of unique, non-fungible tokens, or NFTs, changes all that and flips the entire concept on its head.
Once acquired, the digital asset becomes the property of the user and can be used or sold freely at one’s own discretion, even outside the metaverse.
Much like the various iterations of the metaverse, NFTs can also take on many forms. Any idea, transformed into a digital form can become an NFT. Typically, these are divided into two distinct categories; collectables and utility tokens.
Examples of the first would be digital art, in all its forms, and examples of the latter would be game-related or social platform assets that can both appreciate in value and be put to good use inside the various metaverses.
Preserving the value of NFTs
Now then, it’s fairly obvious that even a perfect copy of the painting of Mona Lisa by Leonardo da Vinci has no true value.
The same applies to copies of NFTs. It’s fairly simple to make a copy of a digital representation of something, but that copy holds no value, compared to the original NFT.
The ownership of digital tokens is maintained by the ledger on the crypto blockchain, which makes it almost impossible to forge records.
Copies of the blockchain are kept on countless computers and each item, contract and transaction on the blockchain are linked to every entry that comes after it.
Forging a record on the blockchain, means you have to re-write the record you want to change, every subsequent entry after it, on every copy of the ledger, all at the same time.
NFTs are locked inside smart contracts and those contain metadata about the owner, as well as other pertinent information.
This is both how the authenticity of the item, as well as the identity of its owner, are ensured. The fact that these measures are in place, means that the value of digital tokens can be preserved.