![]() I can see why NFTs are an interesting technology. ![]() And bringing this quality to the internet through NFTs, they believe, will unlock a whole new market for scarce digital goods. They argue that scarcity is what gives a lot of objects in the offline world their value. (And maybe it will turn out not to be!) But people who are into NFTs think that this idea of being able to claim ownership of digital files is a radically important concept. So NFTs are basically a way to claim ownership of a digital file? The sculpture could be copied or forged - or someone could break into your house and steal it - but because you have the certificate of authenticity, you can prove that you are the owner of the original. If it helps, you can think of NFTs as like the certificate of authenticity you might get if you bought an expensive sculpture. But they make it possible to create an uncopyable digital asset linked to a JPEG, which can be used to mark that particular copy of the JPEG as the “real” one. NFTs don’t make it impossible to copy JPEGs. That realization prompted the creation of the first NFTs.īut aren’t most NFTs just JPEG files that you can copy by right-clicking them and saving them to your computer? How does that solve the file-copying problem?Ĭorrect. And because these files were simply entries on a public database, anyone could verify who owned them, or track them as they changed hands. Several years ago, people realized that blockchains (the shared, decentralized databases that power Bitcoin and other cryptocurrencies) could be used to create unique, uncopyable digital files. If you were an artist who wanted to make only 100 “first editions” of your digital artwork, or a professional athlete who wanted to sell digital trading cards to your fans (and have those cards retain value the same way that physical trading cards would), your options weren’t great. But it was horrible for making them scarce. ![]() The infinite copy-making quality of the internet was great for making digital objects abundant. The internet essentially works like a giant copy machine - any digital file can be duplicated an infinite number of times, and every copy is exactly the same as the original. Well, until pretty recently, nonfungible goods didn’t really exist on the internet. S o nonfungible tokens are sort of like cryptocurrencies, except they have unique qualities and they aren’t necessarily used as money. Tokens can be attached to tangible goods - Nike, for example, is experimenting with crypto tokens that are linked to the ownership of physical shoes - but they can also represent intangible goods, like access to a private chat room or storage space on a cloud server. Cryptocurrencies like Bitcoin, Ether and Dogecoin are tokens, but not all tokens are meant to be used as money. Tokens, in crypto speak, are units of value stored on a blockchain. ![]() (You might be willing to swap your 2020 Honda Civic for another 2020 Honda Civic, but the cars wouldn’t be exactly the same, and you’d want to know what condition the other car was in before you’d agree to the trade.) Most cryptocurrencies are fungible, too - a Bitcoin is a Bitcoin, and it doesn’t really matter which Bitcoin you have.īut most objects in the physical world, such as cars and houses, are nonfungible - meaning they have unique qualities, and you can’t just exchange them for others of the same type. dollar is fungible, because you and a friend can trade $1 bills, and each of you will still have the exact same spending power. In economics, “fungible” is a term used for things that can be exchanged for other things of exactly the same kind. OK, I know NFT stands for nonfungible token.
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