NFT stands for Non-Fungible Token. Before understanding NFT one should have an idea about fungibility and non-fungibility.
Fungible
Assets
Any
asset whose units are interchangeable is known as fungible asset. Every unit of
a fungible asset have a similar market value & validity. Lets take an
example of Rs 100, one note of Pakistani hundred rupees is equal to another
note of Pakistani hundred rupees in terms of validity and value.
Other
examples of fungible assets include precious metals, commodities, cryptocurrencies
etc.
Non-Fungible
Assets
After
knowing you about fungible assets you may have an idea about non fungible
asset. They are not interchangeable with each other because of there unique
properties. Even if they look similar but they are different in market value
it’s because of their properties. Lets take a real-world example of
non-fungible asset that is cinema ticket. Even if two movie tickets of cinema
are same in terms of design, but the front row ticket have more value than the
back row ticket.
What
are NFTs?
The Non-fungible tokens are basically digital assets that feature the information documented in smart contacts. Currently NFTs are the hottest topic in the domain of blockchain. NFTs are unique and it gives a person privilege of complete ownership or authority on a digital asset. One can buy and sell NFTs using crypto currency and amazingly he or she does not need a physical asset to associate with NFT. However, NFTs do represent the physical assets such as artwork.
