Last edited 11 Aug 2021

Non-fungible token NFT



[edit] Introduction

A non-fungible token (NFT) is a distinct digital object that is housed on a blockchain. An NFT is best described as a registration licence for a particular, one of a kind object. For architects, photographers and other producers of original concepts, NFTs are a method of creating, showcasing and commercialising their designs.

In the NFT marketplace, authenticity of original ownership is not the same as copyright.

[edit] Licencing and management

The licence number for the NFT is retained within a blockchain database of information, stored chronologically across a decentralised network of computers. Once published, the information on the blockchain cannot be changed. There is just one single source of information or single source of truth (immutable records of transactions, interactions) on the blockchain maintained by the network and its protocol.

[edit] Blockchain as the NFT backbone

Blockchain was introduced in 2008. It was first adapted as the underlying technology of Bitcoin.

In 2020, blockchain started being used as a management, certification and trading tool for unique digital assets that are tracked on blockchains. These assets could be in any digital format - and could be copied - but there would only be one 'original' NFT record. Assets could include music, fashion, games, video, and so on. NFTs provide a mechanism for creating a market for these intangible items.

The digital collectible market of 2021 has grown exponentially, as more NFTs become available and people become more comfortable with cryptocurrencies.

[edit] Energy issues and crypto trading

Due to its reliance on computing power, blockchain, bitcoin and NFTs have been criticised for their energy usage and the carbon footprints they produce. This is due to their reliance on the proof-of-work protocol that confirms blockchain transactions over public networks.

Some NFTs are seeking alternative measures of authenticity verification - such as proof of stake - that are less energy intensive.

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