NFT’s Explained in 4 minutes!

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NFT's Explained in 4 minutes!

NFT's Explained in 4 minutes!

NFT stands for Non-Fungible Token.Non-fungible means that something cannot beexchanged for another item because it’s unique.For instance, one piece of art is not equalto another.Both have unique properties.Fungible items, on the other hand, can beexchanged for one another.For instance: one dollar or Bitcoin is alwaysequal to another.Okay, but what is an NFT?NFTs are tokens that live on a blockchainand represent ownership of unique items.Why is that useful?Well, tracking who owns a digital file istricky because it can be copied and distributedeffortlessly.So how can you prove who’s the original ownerwhen everyone has an identical copy of thefile?NFTs solve this problem.Imagine that you made a piece of digital art,essentially a JPG, on your computer.You can create or mint an NFT out of this.The NFT that represents your art containsa bit of information about it, such as a uniquefingerprint of the file, a token name, anda symbol.This token is then stored onto a blockchain,and you, the artist, become the owner.Now you can sell that token by creating atransaction on the blockchain.The blockchain makes sure that this informationcan never be tampered with.It also allows you to track who’s the currentowner of a token and for how much it has beensold in the past.It’s important to note that the artwork itselfis not stored within the NFT or the blockchain.Only its attributes such as the fingerprintor hash of the file, a token name, and symbol,and optionally a link to a file hosted onIPFS.More about that in this video here.Now here’s where NFT’s become weird.When you buy an NFT that represents artwork,you don’t get a physical copy of it.Heck, most of the time, everyone can downloada copy for free.The NFT only represents ownership, and thatis recorded in a blockchain so nobody cantamper with it.Some say that NFT’s give you digital braggingrights.And to make it even weirder: while the tokenowner owns the original artwork, the creatorof the NFT retains the copyright and the reproductionrights.So an artist can sell his original artworkas an NFT, but he can still sell prints.Aside from digital art, NFT’s can also beused to sell concert tickets, domain names,rare in-game items, real estate, and basicallyanything that is unique and needs proof ofownership.For example, the founder of Twitter sold hisfirst tweet as an NFT.Anyone can see that tweet on his profile,but now, only one person can own it.And that person paid over 2.9 million dollarsfor it.I could even make an NFT out of this video.You could then buy it and be the owner ofthis video, even though it’s free to watchfor everyone.Why are some NFTs worth millions?Well, their worth is determined by what peopleare willing to pay for it.If I’m willing to pay a hundred dollars fora particular NFT, then it’s worth a hundreddollars.Prices are driven by demand, so be carefulbecause an expensive NFT becomes worthlessif nobody wants to buy it.Okay, one more thing before we end: how dothey work technically?NFTs are smart contracts that live on a blockchain.In this case, the contract stores the uniqueproperties of the item and keeps track ofcurrent and previous owners.An NFT can even be programmed to give royaltiesto the creator every time it exchanges hands.So there you have it!NFTs explained in under 4 minutes.I hope you found it interesting, and if youdid, consider subscribing to this channel.Thanks for watching, and till next time!

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