NFTs: Everything you need to know about NFTs even if you’re just hearing about it
NFTs is an acronym for Non-Fungible Token, and this is not something to crack your head about. A Non-Fungible Token is simply the combination of two words: Non-Fungible and Token, to understand them better, there is a need to explain them individually, starting with Non-Fungible.
Non-Fungible In its literary terms, means Anything that cannot be transferable or interchangeable. That would mean Fungible would mean anything that can be transferable or interchangeable.
A token on the other hand is anything serving as a visible or tangible representation of a fact, quality, or value (monetary). A token can be in any form as long as it’s on the blockchain, It could be a coin? Or a Picture or a Video or a Gif etc.
If that’s the case then, NFTs are Tokens that cannot be Transferable or interchangeable.
Juxtaposing Non-Fungible and Fungible would make this a lot simpler;
A Non Fungible Token is anything (Pictures, Video, Gif, etc) that cannot be transferable or interchangeable, then it means a Fungible Token is something that can be Transferable or Interchangeable.
Based on the difference between the two terms, this would mean a $100 bill is Fungible because it can be interchangeable and Transferable; in an instance where I owe you $100, you can decide to pay me back as two $50 bills, or five $20 bill, It’s Interchangeable.
In another scenario where I send you a $100 bill through PayPal instantly And you send me $50 today and $50 tomorrow, It still amounts to $100, right?
How about you buy an iPhone 13s and I do the same, both brand new, same specifications, same colour, same value, and pricing in the marketing, this means they can be interchangeable;
With this same iPhone 13s analogy, here’s a funny scene where I’m walking down the street and I see Cr7 (I mean Cristiano Ronaldo) in the streets, I walk up to him to say hi and get his autograph on my new iPhone 13.
The moment he signs his autograph, that iPhone 13 with his Autograph on it becomes Non-Fungible — notice I didn’t say it becomes a Non-Fungible Token — now the question would be why does it become Non-Fungible?
Well, the question would be; if you come around with your same iPhone 13s and want to swap with mine (with CR7s autograph), would that be possible?
The answer is NO. And that’s because it’s already Non Fungible — they are no longer replaceable, they are both iPhone 13s but with different perceived values — It’s unique, there is almost only one of it (an iPhone 13s with CR7s autographs) it is truly special.
Again, My answer to a possible swap is NO:
Although it’s the same iPhone 13, the perceived value is different from every other iPhone 13 that was created. This right here is the basic concept of Non-Fungible and Fungible items
It is time to introduce the Token aspect, first, let’s answer the question, Why is the iPhone 13s not a Non-Fungible Token? Well, it’s because an NFT is a Unique and Non-interchangeable unit of data stored on a blockchain.
For that iPhone 13s to become an NFT, I would have to Mint it into the blockchain, literally. When you see an NFT PFP, it is simply a Unique and Non-interchangeable unit of data (the Art and the Traits that makes it unique along with the smart contract backing it) stored on a blockchain.
When we say it’s unique and Non-interchangeable, It means it’s the only one created and in existence both in the entire collection and on the blockchain, it can not be interchanged with any other of its type within its collection to give you the same value that it has.
The dollar bill can be interchangeable, $100 = two $50, But a BAYC NFT is the only one of its kind, no two BAYCs combined can give you that one, and this is the case for every NFT Art you see around.
They are all Unique.
Key Takeaways:
- Non-Fungible In its literary terms, means Anything that cannot be transferable or interchangeable. That would mean Fungible would mean anything that can be transferable or interchangeable.
- A token on the other hand is anything serving as a visible or tangible representation of a fact, quality, or value (monetary). A token can be in any form as long as it’s on the blockchain, It could be a coin? Or a Picture or a Video or a Gif etc.
- NFT is a Unique and Non-interchangeable unit of data (the Art and the Traits that makes it unique along with the smart contract backing it) stored on a blockchain.
