Tinkle ExplainsWhat are NFTs?
Writer: Shreya Ghosh
Illustrator: Narendra Pardhi
Tinkle Explains
So, what are NFTs?
They can be
NFT stands for non-fungible token. What does that even mean? Let’s break down the term. Fungible refers to the quality of something being interchangeable. When you’re able to exchange something for something else of the same kind, it is said to be fungible. NFTs are non-fungible, meaning that they cannot be exchanged with each other. No two NFTs are the same. This is because each has a unique digital code that makes it unique.
Let’s compare this to the real world. For example, you know those paintings that are displayed in museums? Those are usually an original work of art by the artist, meaning it’s one of a kind! Each piece is unique. Similarly, you know how IPL auctions happen every year and different teams bid on different players. Each player has unique strengths and hence can’t be easily interchanged with another.
Yes! NFTs are digital assets that people buy and sell using cryptocurrency! People who purchase NFTs have exclusive ownership of them. That is, each NFT is unique and so is one’s ownership right over an NFT. It is also quite simple to confirm who the owner of an NFT is due to how it is encoded. The data is available easily and this makes the NFT system secure and easy to understand.
The encoding of NFTs is similar to that of cryptocurrency. They are encoded using the same kind of technique, called blockchain. Blockchain is essentially a public digital record that anyone can access with the right software. For example, a cryptocurrency blockchain will tell you exactly how much of that cryptocurrency there is in the market and exactly who owns it. . However, cryptocurrency is fungible. One unit of cryptocurrency is the exact same as another. As mentioned before, no two NFTs are the same! They are non-fungible, remember?
