What Is NFT – NFT Meaning

A token is the digitized way of an asset. The token therefore has a certain value or a certain tool. At the same time, however, actual assets such as real estate or rights can also be tokenized by overwriting the linked rights and obligations on the token. This means that ownership is digitally mapped and can therefore be traded.

A token can be both exchangeable and non-exchangeable. The non-exchangeable in this sense just means that it is a unique digital asset that cannot be exchanged one for another. The situation is different with crypto coins: Bitcoins can be exchanged at will because they always have the same value. It’s the same with cash

NFT, on the other hand, can be compared to art items such as paintings. These have an individual value. When you swap them for each other, you usually don’t get the same value that you pass on.

How Is Ownership Documented?

The story described above is true and is also often cited by NFT comments, but the matter is a bit more complicated than initially assumed. Like cryptocurrencies, NFTs are based on crypto money.

Put simply, this is made up of blocks of data that are lined up like the links in a chain. Each one in turn contains certain information as well as its own hash value and the hash value of the previous block. The details stored in a block can include, for example, the transitions  of cryptocurrencies or NFTs: seller, buyer and the amount.

The hash value can be thought of as an electronic print. It is always unique and is used to identify the block. Since each block also contains the hash value of its predecessor, a chain is created. This is based on a peer to peer platform. When a new detail block is created, all devices on the platform receive this data, compare it and then confirm the inclusion. If someone were to try to insert a block of misinformation into the system, they would have to inject it into all copies of it. Since this is almost impossible, the blockchain represents a very secure option of storage.

So What Does This Have To Do With NFTs?

Since the information can always be traced back on a blockchain, individual ownership can be reported very well. An NFT that is stored on the blockchain can therefore not be copied – at least not within the platform. Of course, digital works of art can be reproduced infinitely often with any practical device, but they are in no way inferior to works of art. And just like a real painting, they derive their value primarily from what we attribute to them.

NFTs are now offered on many trading networks online. In most cases, buying NFTs requires cryptocurrency, which in turn needs to be stored in a digital wallet. Since most NFTs are currently still based on the blockchain, you need the linked currency to buy them.