Non-fungible tokens are crypto assets on blockchain with unique identification codes and metadata that separate them from each other and cannot be traded or exchanged at equivalency.
NFT tokens differ from fungible like cryptocurrencies, which are identical to each other and can be used as a means for commercial transactions.
They are digital representations of assets and because each token has a unique non-transferable identity it is likened to digital passports.
NFTs have an extensible nature, meaning two NFTs can be combined to “breed” a third, unique NFT.
NFTs also contain details of ownership for easy transfer between token holders and identification. Metadata or other attributes pertaining to the asset in NFTs.
For instance, artists can sign their digital artwork with their signature in metadata or tokens representing coffee beans can be classified as fair trade.
NFT tokens are an evolution over the simple concept of cryptocurrencies. NFTs are closer in the reinvention of this infrastructure by enabling digital representations of physical assets.
To be clear, it’s not new to use digital representation of assets. However, these concepts become a potent force for change when they are combined with the benefits of a tamper-resistant blockchain of smart contracts.
Arguably, market efficiency is the most obvious benefit of NFTs. The digital representation of assets into streamlines processes and removes intermediaries.
With NFTs taking the place of digital or physical artwork on a blockchain artists can connect directly with their audiences, while improving business processes.
NFTs are also excellent for identity management. Converting passports to NFTs will make it easier to streamline entry and exit within jurisdictions.
NFTs can also be used for identity management within the digital realm. NFTs pose a possibility for the formation of new market and forms of investment.
NFTs have been implemented in Real Estate in form of tokenized lands, and as the token becomes more sophisticated the same concept might be integrated into financial institutions.
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