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Trading in NFTs increased 21,000%, to over $17 billion in 2021, according to CNBC.com. According to BusinessInsider.com, NFTs grew to a $41 billion market in 2021, nearing the size of the fine art market. Regardless of how we crunch the numbers for that year, and regardless of whether or not the NFT market was in a bubble, the concept of an NFT, a highly reliable digital receipt, has the potential to transform far more than online collecting and social media status symbols.
As strange and cartoonish as many NFTs are, NFT technology may be viewed as the maturing of digital society.
We’re still very early in the space. Since NFTs can be used as digital archives for important records, it is possible that someday most people will own NFTs.
(And by the way, I really like a lot of these strange, cartoonish NTFs!)
For those new to NFTs, you are warmly welcome to one of the fastest growing technologies in human history. I will provide a brief explanation. The word “fungible” is used to describe units of money which all have the same value. One particular dollar is worth the same as any other dollar in the world. There may be some exceptions, for example if the dollars are in an account which is blocked by a bank or government (in which case the dollars in that account would have less value, at least to the person who loses access to his or her funds). However, in general, any dollar has the same value as any other dollar, and therefore we say that dollars are fungible. They all have the same value, and any dollar can replace, or be exchanged for, any other dollar. So that’s the fungible part of NFTs. A dollar is fungible, but something which is nonfungible, like an NFT, is obviously not. Now, what about the token aspect of NFTs?
In the real word, in contrast to the digital world, a “token” means “an object that looks like a coin, and is used instead of a coin, or in a manner similar to the way that a coin is used”. For example, tokens as solid, physical objects may be used in various games, machines, etc. A token is an item, similar to a coin, which is intended to have value or a particular use. In the world of crypto, a token is a type of crypto which is used on a blockchain network, but is not the first, original type of crypto used on that network. The first, original crypto used on a network is usually called a “coin”, while another type of crypto, added to that network at a later point in time, is usually called a “token”. Many tokens are fungible. If a type of token is fungible, any token of that type has the same value as any other token of that type, just like any dollar has the same value as any other dollar. However, nonfungible tokens are unique items. They are put on a blockchain, and they are verified and validated as authentic items by the blockchain, but they are not like dollars or fungible cryptocurrencies. An NFT is similar to a very reliable digital receipt, for a unique digital item. It might be compared with a receipt or other significant documentation, connected to a work of art or a piece of precious jewelry.
Because NFTs are software, they can be programmed for a wide variety of applications, in which one desires to reliably validate ownership of a unique digital item. Their uses include: ownership of visual art, sales of digital music recordings, tickets, memberships in clubs or organizations, proof of identity online, and even unique internet addresses for websites. Although the NFT market may fluctuate, the technology is already transforming digital culture. NFTs are here to stay!
Some NFT markets to explore:
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