Web 3.0 and the development of programmable blockchains have led to advancements in the way that we can utilise the internet including the ability for anybody to build their own applications on top of the blockchain. These decentralised applications can be used for a variety of purposes and are becoming increasingly popular. However, none of these applications have had as much impact as Non-Fungible Tokens, (NFTs).

What does the word fungible mean?

If an asset is “fungible” this means that it can be replaced by another mutually interchangeable asset of identical value. A good example of a fungible asset is money. You can swap a 10-pound note for two 5-pound notes, and both assets retain the exact same value. If something is non-fungible it has unique properties and cannot be replaced with something else. A good example of something that is non-fungible is a famous painting such as The Mona Lisa. The painting is one of a kind and is therefore irreplaceable or non-fungible.

What is a non-fungible token?

An NFT is a unique unit of data stored on a cryptocurrency blockchain, primarily Ethereum, that represents real world objects such as music, art, in-game items and more. When a user purchases an NFT they are purchasing a token that proves their ownership of a unique item. These tokens can only have one official owner at a time and a record of ownership is stored on the blockchain. This means that anyone can view the current or previous owners as well as the price history of an asset.

Although they have been around since 2014, NFT’s really took off in 2021 as an increasingly popular way to buy and sell digital art. It is now common to hear of NFT’s selling for hundreds of thousands and even millions of dollars. Indeed, a JPEG file of a rock sold for a staggering 1.7 million dollars. Anyone can create and sell an NFT. The process is simple, all you need is...

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