What is an NFT?
NFT stands for Non-Fungible Token. NFTs are digital assets that utilise blockchain technology to establish proof of ownership of a unique token that cannot be divided or fractionalised, meaning there can only be one of your NFTs [1]. This uniqueness drives value due to scarcity and increases desirability [2].
What can I do with my Non-Fungible Token?
NFTs are used for a multitude of things, their primary use in all ecosystems right now is profile pictures to give status. Similar to how any oil baron will ride around in a Lamborghini, any successful crypto trader will be displaying a blue-chip monkey NFT as their profile picture.
NFTs extend far beyond just a profile picture and the majority of their value is driven by the community of people who hold the NFT. Value is additionally driven back to the holders through reward schemes such as token airdrops, early access, staking rewards, access to tool suites and metaverse applications [3].
How does it work?
NFTs are enabled through blockchain technology that combines decentralised file storage systems with a block timestamping chain technology. A key facet of NFTs is the way that the assets leverage distributed ledgers and file storage technology is more secure than any traditional financial asset, whilst enabling proof of ownership [4]. Typically we see NFTs comprising of a PNG or an MP4 accompanied by a .json of text also known as metadata. The metadata usually details a few vital pieces of information such as collection name, NFT ID, trait variables and useful related blockchain data [5].
How can I view it?
On Solana, your NFTs are viewable through your Phantom wallet plugin, your favourite marketplace, rarity tool, slurp.place, blockchain explorer and many more tools.
Virtual vs Physical art?
One of the key principles of this digital art revolution is intellectual property allocation. Unlike physical art, anyone who owns these digital assets additionally owns the IP to the art and may repurpose it without the worry of legal repercussions. Creator royalties are another great incentive for artists creating digital art. Unlike in the physical world, in every NFT transaction, some set % of the fee gets auto-allocated and sent to the creator of said NFT. Finally, distributed ledger technology allows for absolute proof of ownership.
