0rlaDev

Welcome to this new article about DeFi. Today I decided to introduce the concept of NFT (Non-Fungible Token).

The hype around NFTs and digital art in general is huge. Everyone is jumping into NFTs right now. But why? What's the matter with NFTs?

The current market capitalization of transactions globally involving NFTs is around $338 million. It might sound crazy but it looks like at the moment there is no hint of slowing down. Some people say that it is an absurdity buying digital art for millions of dollars, other say that this is a new era which has opened the doors for a digital revolution.

Whatever is the point around NFT, today I just want to answer a simple question.

What is an NFT?

The goal of this article is to explain the concept in the easiest way possible, in order to ease the understanding for those who are new to the DeFi field. (if you are a nerdy blockchain master or an aspiring blockchain developer, check here)

Let’s think for a moment at what Fungible means:

"something which can be exchanged, traded or substituted and it will hold the same value, no matter what"

Some examples of fungible tokens are: the Dollar and Gold (in the physical world) or Bitcoin and Ethereum (in the digital case). So if I trade 1 BTC for less or more than 1 BTC, the exchanged tokens will always hold the same total value. This is the main concept around fungible tokens.

So what are Non-Fungible Tokens?

Non-fungible tokens are the exact opposite of Fungible ones (yeah, I am a smart guy, how did I even come up with this?)

Jokes aside, non-fungibility is a property of an asset which cannot be substituted. If traded, it will not have the same value it had, for you, before. In the real world, something non-fungible could be a piece of art, a concert ticket or a house. In the digital world, a non-fungible token could be anything digital like a piece of digital art, a domain name, a recorded track, a cryptopunk or a cryptokittie.

This innocent looking Dragon CryptoKittie, has been sold for 600 ETH (~ $1 million)

Enter the Matrix

A token refers to a digital contract (or certificate) hosted on a distributed ledger (database) called a Blockchain. If you are interested in what a blockchain is, I will definitely write an article about that in the future but you can also find tons of resources surfing the web.

Blockchains are secure by design and all the data which is stored on a blockchain is digitally signed. They mainly store transactions but can also store things like smart contracts and other digital assets.

Everything on a blockchain is publicly verifiable and authentic. The reason behind why Blockchains are secure by design is a very complex topic which involves cryptography and mathematic so I will not delve into it. Just understand that each single transaction which is stored on a digital ledger (the blockchain) cannot be modified.

So if you take NFTs (which are tokens, or better, smart contracts, representing anything digital) and you “store” them on a blockchain…there you go, you’ve just created something which is unique, indivisible, verifiable and capable of being authenticated. So anything digital, stored as an NFT, can be easily thought as a piece of art given its uniqueness.

Creating a NFT it's easier than you think. Now that many artists are entering the market, many platforms decided to ease the process for non-technical guys.

You do not have to be a magician or a software developer anymore to create your own NFTs, you just have to be creative and head to rarible.com or opensea.io (actually there are many other NFTs marketplaces out there, but I am gonna give you these two, just to get you started).

Can you feel the power?