The original assets (or tokens) on blockchains (like Bitcoin) were ‘fungible’. That means that one is interchangeable with another. To help understand this we can give you an example; if you lend a tenner to a friend, you would not care whether that friend handed back to you the exact same tenner or a different one (or even a couple of fivers, though you might have a sharp word to say about a handful in shrapnel…).
Pound sterling is ‘fungible’. Any one pound is treated the same as any other. It is no surprise then that a ‘non-fungible’ asset is the opposite: If you lend someone your car, when they return it, it had better be the exact same car! You don’t want a different car back, not even if it is the same make, model and colour (well… you might, if it was newer or cleaner… but you get the point).
So, NFT’s exist on the blockchain, like fungible tokens do. They can be transferred between people like fungible tokens and be bought and sold.
You’ve probably come across NFT’s in the form of so-called ‘art’ works, like bored apes, or crypto punks or floofy-floppy flip-flops or whatnot. Here, an NFT is associated with a work of art and acts as a sort of digital signature for that work of art. Only the holder of the NFT can claim to be the true owner of that piece of art, and the NFT proves it.
NFT’s come in many shapes and forms, however. For example, some NFT’s are made to be used in games. Cryptokitties were one of the first NFT’s popularised. In this context, an NFT could represent a game character, an item or booster or anything at all.
Non-fungible token’s now also grant ownership over a domain address. NFT’s may represent actual real-world assets. The potential uses for NFT’s are vast; one could easily see a Non-fungible token as representing a house, or plot of land or even an academic qualification. Around the World, governments and businesses are starting the explore the advantages of blockchain technology and the function of NFT’s will play a big part in that.
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