You may have recently seen in the news digital artworks sold for millions of dollars. One example was the sale of the first tweet in history for a whopping $2.9 million. Now you might be wondering, how?
The magic lies in non-fungible tokens, or NFTs. These are digital files with a unique identity and a defined owner, but the internet is very open and easy to replicate, which translates to exclusivity.
NFTs use blockchain technology to certify their uniqueness and differentiate themselves from other digital files on the internet. The blockchain works similarly to a notepad stored in a safe. This notepad records transactions between individuals, and its contents cannot be altered. Why? Because access and changes can only be made if all participants who contribute to the document agree to them.
This is how Bitcoin works, so both NFTs and cryptocurrencies share a similar way of functioning and ensuring their authenticity: a decentralized community verifies transactions and approves any changes to the ledger. It\'s the same with NFTs.
The difference between NFTs and Bitcoin is that Bitcoin is limited and fungible, meaning one Bitcoin can be exchanged for another and both have the same value and price. NFTs are unique but unlimited and non-fungible, meaning there is only one of each. Although NFTs can appreciate in value, they cannot be exchanged for another NFT.
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