Interestingly, this animation – titled Quantum – was created before the term NFT was officially coined, and in 2021, Quantum was auctioned off by Sotheby’s. The duo made an octagonal animation, the first-ever work of art to have smart contract-based ownership. The first known NFT, going by its current definition, was created by U.S.-based artist Kevin McCoy and American entrepreneur Anil Dash. For example, one can create a non-fungible token from the gaming avatar, a graphics interchange format (GIF) file, or even a meme. However, since it is built on a bedrock of digital IT infrastructure, NFTs can accumulate a massive variety of assets that are unimaginable in the real world. NFTs, by their very nature, resemble physical assets with a clear line of ownership and provenance. However, cryptocurrency is characterized by its fungibility, making it somewhat like the fiat currencies we use daily. NFT or non-fungible token, falls into this asset category, unlike cryptocurrency, which is also a blockchain-based asset class. For example, real estate does not have fungibility quality, nor does artwork. Non-interchangeable or non-fungible assets have an intrinsic value of their own and cannot stand in for another so easily. Regular fiat currency has the quality of fungibility, which means that one dollar is the same in value as another dollar. Fungibility refers to a property that allows assets to be traded for another without change in value or allows one asset to stand in for another.

These asset classes powered by blockchain can be of two types – an interchangeable (or fungible) asset or a non-fungible asset. As a result, blockchain records turn into an asset class held together by smart contracts that are impossible to violate or defraud. This data could be applied to various use cases, from consumer data in marketing and loyalty programs to entire currency systems. Blockchain allows data to be transparently and immutably held in an interconnected chain of records called blocks. Non-fungible tokens are a relatively new technology that has become popular due to the rise of blockchain and cryptocurrency. NFT, short for a non-fungible token, is defined as a blockchain record intrinsically connected to a real word or digital asset with clear ownership via smart contract technology, which allows NFT to be bought, sold, traded, or transferred.

Whats nfts stand for