NFTs

What’s an NFT?

Short answer:

An NFT is a digital ticket or ‘certificate of ownership’ that can be used to track and verify the ownership of both physical (eg. property) and non-physical items (eg. digital art).

Long Answer:

NFT stands for Non Fungible Token, ‘Non Fungible’ meaning it’s unique in its value and cannot be replicated.

Think of it like this: if we each had a dollar bill and swapped them, neither of us would be richer or poorer for it, because that piece of paper represents the same dollar value (dollar bills are fungible).

But if we had an exact replica of the Mona Lisa and you had the real Mona Lisa, when we swapped them - you would be poorer for it (sorry). Because no matter how close our replica is, it’s still not the real thing.

‘Ok cool, I get that, but what is an NFT?’

Righto! Think of an NFT like a digital ticket or certificate of authenticity. It can be used to verify ownership of physical items (like a deed to a house) or non-physical items (like digital art). If you hold that digital certificate, it verifies your ownership of it.

Beyond verifying digital art, use cases of NFT’s are ever evolving. Currently some notable use cases are:

• Ticketing to private events

• Fractional shares in real estate

• Access to private communities

‘Ok, that makes sense, but how come they go up in value so quickly?’

What makes (some, not all) NFT’s increase in value so rapidly is the real time tracking of trading volume and price fluctuation. Because every transaction is tracked on a digital public ledger (aka a blockchain), demand and value can be shown in real time.

Traditional methods are much slower - if you owned a house or a rare piece of art, a third party would first need to spend weeks or months appraising it, then hold an auction before its true value could be confirmed.