Non-Fungible tokens, more commonly referred to as NFTs are globally unique tokens stored on a blockchain.
Unlike cryptocurrencies where you can trade one Bitcoin for another Bitcoin and end up still owning one Bitcoin. An NFT is globally unique so if you trade one NFT for another NFT you now own a different NFT.
This is may be easier to understand using the physical world as an example.
Cryptocurrencies are just like our physical currencies where if I were to go to the bank and exchange one dollar for another dollar, I would still have one dollar with the same value and roughly the same attributes.
Where NFTs are more like houses. If I were to buy a house, then sell that house for a different house, I still own a house but it is globally unique. No one else has my house in the same location, with the same value and attributes.
What Good is an NFT
Currently when people think of NFTs, they think of collectibles such as art, music, or videos. With the growing popularity of NFTs it has allowed a lot of creatives to finally profit from their passions of creating, which helped bring NFTs to the main stream.
However, there is more to NFTs than just collectibles and here are a few ways we will continue to see NFTs change our world.
X to Earn
With the raise of the token economy we will be able to start seeing people doing all sorts of activities to earn digital tokens. Some examples of this would be play to earn, learn to earn, exercise to earn, and watch to earn.
It all comes down to the person who helps build the specific token community having the ability to extract value from the community they helped build.
With NFTs being globally unique we could attach basic identity information to it that would allow use to do certain things by being verified via the blockchain.
Imaging being able to verify a user without needing their private information.
We are seeing this now with certain groups, but the idea of being able to give exclusive access to information based on owning a specific NFT.
This would allow creators and researchers to get value from people who use their content for entertainment or business.
Where Does it Go From Here
I have touched on some pretty high level ideas of how NFTs can grow beyond the collectables realm. With some time and innovation I think NFTs will allow individuals to be rewarded for the value they create on the internet and I am pretty excited to see how it plays out.
Where do you see NFTs growing or making an impact in the world?