Non-Fungible Token (NFT)

What is a non-fungible token? A non-fungible token (NFT) is a type of cryptographic asset that is unique and used to create and verify ownership of digital assets. These include cartoons, music, movies and video clips, JPEGs, postcards, sports trading cards, and virtual real estate or pets. NFTs provide a secure record that is marked with a unique identification code stored on the blockchain. Unlike stocks, bonds and other traditional investments, NFTs are considered an alternative investment that is not interchangeable or replaceable with a similar item. Demand for NFTs, which are like rare collectibles, picked up pace in 2020 and will increase dramatically in 2021. This has increased the price of digital artwork, with celebrities, content creators, auction houses and others participating in the market.

How do NFTs work? The unique properties of NFTs make them "unfungible". This contrasts with "fungible" assets such as bitcoin and other cryptocurrencies, dollar bills, gold bullion or stocks, which have a fixed value and are interchangeable. While one dollar bill can be exchanged for another dollar bill or one bitcoin can easily be exchanged for another, this is not the case with NFTs. NFTs are also indivisible. The basic unit of an NFT is a token, which cannot be divided into smaller denominations, as a dollar can be divided into 10 dimes. However, NFTs may be divisible in the future. (Corinne Bernstein)