What is NFT?
NFT is an acronym for non-fungible token.
Before you wonder how this concerns you, let me explain:
In commerce, non-fungible items are items that cannot be replaced or substituted with another item of equal value (utility). For instance, the items used in trade-by-barter are all fungible because we are replacing what we have with what we want or need.
Token, on the other hand, is an item serving as a symbol of something else. A son is going to the boarding school, his father gives him a story book, saying “I read this book 30 years ago when I was like you, keep it as a token (symbol or sign) of my love and support for your education. Any time you bring this book to read, remember that I will support your education”.
Typically, NFT could mean an irreplaceable (unique) item serving as a symbol of something important.
How does it work?
The above definition stripped NFT of its digital inclinations, just so you have a non-technical understanding before we delve into it completely.
A Little Digression Please…
NFT is a part of Ethereum blockchain. Ethereum on the other hand, is a cryptocurrency (decentralized open source blockchain with smart functionalities) just like Bitcoin and dogecoin, but its blockchain supports NFT.
A cryptocurrency is a digital payment system that doesn’t rely on banks to approve transactions. It’s a peer-to-peer system that enables anyone anywhere to send and receive payments.
Blockchain is a growing list of records (information such as transaction data, timestamp of transaction and the cryptographic harsh) called blocks, that are linked together using cryptography. Because each new block is linked to the previous block, it is called chain (blockchain). What this means is, every new block contains the same information in the previous block before an additional new information.
For instance, the Morse code: -.. .-.. – – – …- .-. – – – – – – – – ..- simply means “I LOVE YOU”.
…Okay, Back to the Matter
NFT could be anything digital, such as a picture, audio, video, work of art, etc. Here is a typical example:
Assuming that Davido, a sensational African Artist of the moment, makes a video of a new song, but instead of uploading on YouTube as usual, he makes only two CD plates of this video and sells one to Dangote and the other to Otedola for ten thousand US Dollars each. Given that Davido remains relevant in the music industry, Dangote can wake one day, and decides to sell his CD plate for twenty US Dollars and many people will fight to buy it.
It may sound stupid, but people would sell their ancestral lands, to know what is in a video that is owned by only two people in the whole world.
These CD plates are known as non-fungible tokens or NFTs. Remember there is a condition attached, and it is “Davido must remain relevant in the industry” for the CD plate to be a worth in Dangote and Otedola’s archives.
Is NFT just a media hype or true?
The answer to this question depends on what we pay attention to or count as important.
Because some things that are countable don’t count (not important) and some uncountable things really count (important).
Why NFTs?
The truth is, anyone can have a copy of a digital file including the art that is an NFT but NFTs are designed to give you ownership. For instance, everyone can have a copy of my certificate, but I own the original.
The benefit of NFTs depends on whether you’re an artist, a buyer or a collector:
As an artist, NFT gives you the opportunity to sale an idea that you will not find a market for on a normal. If not for NFT, who in his right senses will want to sell digital picture of a stone? Also, Ethereum provides the possibility of getting commissions for every time your art is resold. Like Davido getting money, whenever Dangote or Otedola sells their NFTs.
As a buyer, this is one of the ways to financially support artists you like. Also, it gives you bragging right of “ownership”
