If you are someone who stays on social media platforms, particularly Twitter and Facebook, you might have scrolled through this topic now. You would have done one of two things – one, ignore it and keep scrolling, or two, asked yourself, “what the heck is an NFT?”
The world is too confusing already so I will try to make this as simple as I can and as simple as technology can be (although, I’d say, that would be really challenging, ha!).
So, what is an NFT?
NFT stands for Non-Fungible Tokens – non-fungible meaning, they are unique and they cannot be replicated or tampered with by anyone.
Non fungible tokens were originally used to keep confidential records of information and data mostly by people working in the medical and financial field. Thus, it originally was associated or called a “digital ledger”.
In our previous blog post about the Future of NFTs, I discussed a bit more about the history of NFTs and how it’s revolutionized into how it is now.
Given this definition, the easiest way to explain NFT is that an NFT is an item, whether it’s digital or physical art, data, or coins, or anything that is assigned a unique identifier in a blockchain.
Understanding how NFTs work
One way I would picture this is, let’s take, for example, an item in a grocery store. Each item has its own barcode, right? And that code is unique to itself so that when someone buys that item and they scan it, it shows that it is that particular item you’re purchasing.
This is somehow the same as how NFTs work, however, more complex.
In the grocery store, there is only one ledger or database used to store the list of items and their corresponding code. This makes it easy for one person to alter the codes associated with each item.
However, in the blockchain, the information is not centralized. There is not one person who has access to all the information or the source. And this is the beauty of blockchain technology, it protects data from being manipulated.
For us to understand NFTs, we have to understand blockchain and as I’ve mentioned above, I will try to explain it the simplest I can (if that’s even possible with technology.)
A blockchain is a digital ledger that is distributed not only to one source or person but is distributed to an entire chain of users.
So, let’s say, you created a piece of information and you want it added to the blockchain – which is what they call “minting”. What happens then is that the information you upload to the blockchain, will go through a validation process and once the authenticity is verified, it will be stored as a block in a blockchain. That data will then be distributed to all the users inside that blockchain so that every user/computer will have a record of the transaction.
Going back to the supermarket example, in a blockchain situation, the ledger where items with the barcodes are listed is multiplied a few times and distributed to the number of employees in the supermarket. That’s how I would physically imagine it.
Once that happens, your artwork, data, or information will now be considered a Non-Fungible Token – meaning, it could no longer be altered, changed, or hacked by anyone.
What Makes NFTs incorruptible?
When you understand how NFTs work, this question is actually self-explanatory.
Think about it, if a ledger that contains the information is distributed to different people, different users, it will be excruciating trying to change ALL the records. Think about a record of a purchase transaction being multiplied a hundred times and distributed to different computers.
Even if you are the most brilliant hacker in the world, you’d be crazy to try and delete all the records of that transaction that is in the blockchain – that’s how impossible it is.
What makes NFTs appealing to a lot of people is that once data, information, or artwork is minted into the blockchain, control becomes decentralized. There is not one person controlling the blockchain and so, it becomes unchangeable. There is no manipulation of data.
And that’s why every token or item in the blockchain is unique. It’s one of its kind. And so, it is being used right now to sort of patent digital artworks that are otherwise distributed without copyright and credit over the internet by someone.
More about NFTs
I hope I was able to explain it simply in a way that you are able to understand and picture out how NFTs really work.
If you have any questions, concerns, or suggestions, please feel free to leave a comment or join our discussion in our Discord Community. We got a lot of beautiful people in there who are so excited and willing to walk you through and support you in your NFT journey.
And if you want to enhance your knowledge more and start leveraging NFTs for your business, enroll in our NFT 101 Course now, where I teach you the basics of NFTs and how you can start creating your own NFT projects that have the potential of bringing you an extra source of income.