NFT | Basics
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What are NFTs?
In a nutshell, NFTs are non-fungible tokens which digitally represent ownership of something.
Following this definition each NFT shares at least three properties:
NFTs are “non-fungible” which means that each NFT (or token) is unique in a sense that there is no other thing just like it. In other words, each NFT is one of a kind just like there is only one painting that is the real Mona Lisa. (A fungible token, on the other hand, is not unique. It would not make any difference if a fungible token would be exchanged for another token of the same kind such as a Bitcoin.)
NFTs represent ownership which implies that an NFTs is treated as the actual thing that it stands for so that by selling an NFT you are also selling “the real thing” that it represents.
NFTs can be used to tokenize and represent anything from physical things (like a house) to natively digital assets (like a crypto punk) to ideas and intellectual property.
How NFTs work ?
To understand how NFTs work, one must consider two perspectives:
The functional perspective which is about understanding the implications of NFTs for its adopters and the market, particularly what NFTs enable one to do (that could not be done without NFTs).
The technical perspective, which is about understanding the technologies on which NFTs are built and their properties which give rise to NFT’s functionality in the first place.
Functional Perspective
NFTs allow us to have digital representations of potentially anything in a way that these representations are unique, trustworthy (or at least a tamper proof record of ownership) and can be traded. We can distinguish the following roles or functionalities:
Issuers - Parties who create (“mint”) NFTs and issue (“drop”) them to someone else (“Holders”). Issuers are the original sources of an NFT. For example, artists who mint their creations as NFTs and transfers them to buyers.
Holders - Individuals or organizations who receive NFTs from someone else (but not necessarily from the original “Issuer”, considering that NFTs are transferable).
Verifiers - Parties who verify NFT ownership and metadata in order to provide access to information, services, products or other benefits, such as is the case with tickets, vouchers or other forms of memberships more generally.
Illustration of functional roles in NFT ecosystems
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