What is an NFT?

An NFT is a non-fungible token. What in the world does that mean? Keep reading to find out! 

Fungible

“Fungible” is an economics term describing the property of a good or commodity that makes it interchangeable. For example, a $100 bill can be exchanged for five $20 bills or 100 $1 bills without changing the spending value.  

Non-fungible

“Non-fungible” means that whatever you have cannot be exchanged for something of equal value because there is nothing else like it. Non-fungible tokens (NFTs) are cryptographic assets. 

Cryptographic assets

A cryptographic asset refers to how the asset (something of use or value) is made. Cryptography is used to protect digital data. It’s a type of encryption using algorithms and a key to encode information. The NFT is uniquely encrypted to ensure against malicious third parties called adversaries. Mathematics is used in computer science to create unique identifiers and to hide information, so it cannot be hacked or duplicated. NFTs are cryptographic assets on a blockchain with coded information, such as unique identifiers and metadata, that distinguishes them from one another. 

Blockchain

A blockchain is a system in which a record of transactions is maintained across several computers linked in a peer-to-peer network. This is used for cryptocurrencies such as Bitcoin. A blockchain is a shared, unchangeable digital ledger that tracks assets and records transactions in a business network. This ledger is decentralized and public, distributed across multiple computers that cannot be altered retroactively. Almost all NFTs are a part of the Ethereum blockchain. Ethereum is one of many cryptocurrencies used today. The blockchain concept is that people do not have to trust a single company or entity to keep things secure. The security is spread across every computer in the network, making fraud impossible. 

Almost anything can be an NFT. Currently, NFTs are primarily digital, potentially using smart contracts on the blockchain for transactions such as selling a home. 

Smart Contract

A smart contract is a computer program or transaction protocol that runs on the blockchain when certain conditions are met, automatically executing, controlling, or legally documenting relevant events and actions according to the terms of the contract or agreement. They are run on a blockchain to ensure transparency, accuracy, security, and traceability. 

NFTs in Art and Design

NFTs have taken the art and design world by storm. NFTs provide creators a way to own digital art and sell, trade, or lend out this art to others. To sell a digital art piece, designers have to authenticate it through a process called “minting.” Tracking copyright ownership and maintaining records makes the blockchain valuable, especially to artists and designers creating and selling NFT digital art. NFT art is a brand-new method of monetizing art. Designers no longer have to be chosen to feature their art in galleries. They can now mint their digital artwork and sell it themselves directly to their audience. Depending on the smart contract attached to the NFT, it may even allow for royalties in perpetuity for the artist—meaning that the artist gets a share of every sale of an NFT as it changes hands from one person to the next.  

The most Expensive

The most famous—and the most expensive—NFT sale in 2021 was Beeple’s Everydays: The First 5000 Days, which sold for a whopping $69.3 million in US dollars.  

Wearable NFTs

One of the most famous NFTs is the Bored Ape Yacht Club NFT series, a collection of 10,000 unique Bored Ape images living on the Ethereum blockchain. Each digital art piece was created using a randomizer code that creates rarity in the combination of expressions, apparel, style, color, and other details of the ape. This has evolved from a digital asset to wearable, collectible merchandise.

NFTs for Artists and Designers

NFTs provide artists and designers a chance to copyright and distribute their art on a secure system that tracks the transference of ownership and allows for royalties to be collected endlessly on every sale. This will enable creatives to get their art into the hands of followers and interested parties such as investors easier and quicker than through more traditional, non-digital routes. 

Mockup Your NFT

Do you have an NFT or a design you want to turn into an NFT? You can see how it looks on merchandise mockups like a t-shirt here!