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Source: Livemint
What is the News?
Non-fungible tokens(NFT) have made digital art a worthy collectible by solving the problems of provenance and duplication.
What are Fungible and Non-Fungible assets?
- A fungible asset is something that can be readily interchanged like money. With money, you can swap a £10 note for two £5 notes, and it will have the same value.
- On the other hand, a non-fungible asset means it has unique properties which cannot be interchanged with something else. Example: It could be a painting that is one of a kind. You can take a photo of the painting or buy a print, but there will only ever be one original painting.
What are Non-Fungible Tokens(NFTs)?
- Non-Fungible Tokens(NFTs) are unique cryptographic tokens that exist on a blockchain and cannot be replicated.
- They are one-of-a-kind assets in the digital world that can be bought and sold like any other piece of property, but they have no tangible form of their own.
- The digital tokens can be thought of as certificates of ownership for virtual or physical assets.
How do NFTs work?
- Traditional works of art such as paintings are valuable because they are one of a kind. But digital files can be easily and endlessly duplicated.
- With NFTs, artwork can be “tokenized” to create a digital certificate of ownership that can be bought and sold.
- As with crypto-currency, a record of who owns what is stored on a shared ledger known as the blockchain.
- The records cannot be forged because the ledger is maintained by thousands of computers around the world.
- Similarly, NFTs can also contain smart contracts that can solve the problems of provenance and duplication of the art.
