Let’s have a look at it in more detail.
Before we begin, there are two terms that you should be familiar with. Non-Fungible is the first, and Token is the second. Fungible is defined as something that can be swapped or substituted for something of equivalent worth.
Let’s start with a real-life scenario. If I had a $100 dollar, I wouldn’t have any trouble trading it for another $100 bill because they both represent the same value and are hence fungible. Similarly, because the value of gold remains the same, I can swap my gold for anyone else’s gold of the same quantity.
In the digital realm, things work similarly. Because we agree that both bitcoin and Ethereum are interchangeable, exchangeable, and fungible, I can exchange my bitcoin or Ethereum for your bitcoin or Ethereum as long as the quantity is the same. The Non-Fungible is as simple as this: Monalisa’s painting is one-of-a-kind and cannot be replaced because no other artwork can match its value, making it Non-Fungible.
Tokens that are fungible vs. non-fungible
Are you still lost?
Consider the following scenario: Nathan and Emma each hold a $100 bill. Could they still have the same amount of money if they swapped $100 bills? Of course, because both bills have the same value and may be used interchangeably. Consider the following scenario: Emma receives an autograph from her favourite musician on a $100 bill.
Would she still do it if Nathan asked her to trade? No, most likely not, because the autograph has turned the bill into a one-of-a-kind item, making the signed bill a Non-Fungible Token.
Let’s move on to the second word, Token. What exactly is a token? Before we can grasp a token, we must first comprehend the Blockchain. Consider a digital ledger that is open to the general public. To keep things simple, we’ll employ Emma and Nathan again in this scenario. Let’s say Emma sends Nathan $500. Emma and Nathan each have a copy of the digital ledger in which the transaction is recorded. Consider what would happen if, instead of each receiving their own copy of the transaction, Emma and Nathan could see it on a public ledger. Number of Pages (Contract address)
This page or block of data is linked to the previous block, forming a chain of blocks that resembles a social network feed. Instead of photographs of your friends‘ infants, the Blockchain provides a feed of past transactions that are linked in a chain. Transactions on the blockchain can’t be edited or altered, and they’re always open to the public. This helps to distinguish assets and shows who owns them to everyone on the Blockchain.
NFTs are a type of asset ( Non-Fungible Token )
Let’s look at that autographed $100 bill one more. Let’s say Emma snaps a photo of that $100 cash and turns it into a token on a website like opensea.io. By minting a token, the image of the $100 bill is now linked to an ownership certificate on the Blockchain, transforming the autographed note into a publicly verifiable asset. Emma’s $100 note is now a Non-Fungible Token as a result of her actions.
We can begin to learn how to trade NFTs and why they are so useful now that we have a basic understanding of what they are. Check out non-fungible token news for additional details.