What are the NFTs? What does a non-fungible token mean?

If you go online at least once a day and read the news, you will definitely come across the concept of NFT: "The head of Instagram allowed the integration of NFT into the social network"; "Millions of dollars and dislikes: how NFTs slowly but inexorably penetrate games"; "Melania Trump launched an NFT market" and similar headlines appear on the web a thousand times a day. The word NFT became the most popular in the past year, and many celebrities supported the topic. Among them are Elon Musk, Steve Cohen, Twitter founder Jack Dorsey, crypto artist Beeple and others.

This list can go on for a very long time. But do you understand the essence of NFT? Do you know how blockchain works and why people pay millions of dollars for a picture that you can download for free? If not, we will try to figure it out in this article.

Root of the question

It’s worth starting with the fact that NFT is not just a picture on the Internet that you buy or sell. There are trillions of pictures on the web. You can freely download each of them for free, and no NFT is required here. From English, NFT stands for non-fungible token, a non-fungible token, and is a unique certificate for the ownership of an image, multimedia object, GIF or video on the Internet. The difference between cryptocurrencies and NFTs is that each coin has its own fixed value. Any of them can be exchanged for another and then sold for the same price. At the same time, each NFT is unique and has its own price. It is not interchangeable.

Simple analogies

After all this, you may be wondering: what then makes NFTs so unique? The answer is simple: the desire of people to be different from each other. The simplest and at the same time the first NFT prototype appeared back in 2013. He is associated with the Valve Corporation. Have no idea what it's about? It was then that skins appeared in the CS:GO game a year after the release. People who have never bought skins can never understand why someone would need to spend a lot of money on pictures drawn on weapons in a video game. Meanwhile, the most expensive skin is the AK-47 StatTrak Voy for $150,000. Who bought it and for what purpose is unknown. The same thing happens with NFT, only in a more advanced form: with the addition of a blockchain, certificates, exchangers, but the scheme remains unchanged. If you have friends who play CS:GO, ask them what makes skins special and you'll get the answer to what makes NFTs special.

NFT record holders

Unlike their ancestor, non-fungible tokens have jumped skins a lot in terms of evolution. Today, the most expensive NFT is a black-and-white work by the artist called The Merge, worth $92 million. A little less is the work of Everyday: the First 5000 Days - 69 million dollars.

I bought an NFT? Do I own it?

A certain curiosity arises when people who have bought an NFT image for personal use think that they have some kind of unique rights to it. No, it doesn't work that way. For example, a viral Nyan Cat video was bought by someone for $580,000, but you can still watch it, download it, put it on your desktop background and not wait for a check from the owner. If you don't believe me, try it right now. Here it is. Like skins, NFTs have value for collectors who collect ownership rights to rare materials and then sell them for a hefty price. By the way, since 2013, each skin in CS: GO has risen in price by thousands of dollars. Even then, some users specifically bought the game in order to later buy rare expensive skins. Over time, their business has paid off handsomely.

Blockchain Features

Another, albeit more primitive, example of how blockchain works is real estate. When you buy an apartment in Russia, absolutely any apartment in absolutely any city or village, a record of this is immediately recorded in the Unified State Register of Real Estate, where you are then marked as a full owner. A similar process occurs when you buy an NFT: the purchase data is recorded on the blockchain. It will indicate when you bought this or that object, for what amount, what it is and, of course, your rights to the object as its owner will be indicated there.

What are the prospects?

Logically, blockchain technology will not disappear in the future. Perhaps it will even help fight corruption: if all students are issued diplomas only as NFTs (also applies to medical certificates), it will be much more difficult to forge documents or buy them. Indirectly, the appearance of NFT was influenced by an overabundance of content on the Internet: trillions of pictures and videos ceased to attract attention. Expressing yourself and your interests goes under the content ownership model. Fordham University professor Donna Redel argues that the NFT will not be able to replace existing business models, and does not have such a goal. The task of the blockchain is to change them, improve them, adapt them to the future.