The cryptocurrency ecosystem is ever-changing; there are a number of tokens, coins, currencies, and assets that are available, each holding a different value intrinsically. One such asset is NFTs, or non-fungible tokens, which are essentially types of cryptocurrency tokens that are indivisible and entirely unique.
A non-fungible token, or NFT, is a piece of digital information, or “token”. It could be a picture, a song, a video clip – anything, in fact, that can be stored digitally. Fine, you say. I already have all my songs as digital files. I can copy any digital picture I like, so why would I pay a fortune (or anything at all)? But this is where NFTs get their value – they’re not copies but unique pieces.
NFTs are a cousin of cryptocurrencies, such as Bitcoin, and like those currencies, they’re stored on a blockchain. Blockchains are databases, with each unit of digital data a block and all the blocks chained together. Crucially, no single person has control. Instead, all the users in the chain control what happens.
Enhance Inclusivity
While cryptocurrency aims at improving inclusivity, this goal is yet to be fully met. These NFTs bring creators and traders from different fields into a single ecosystem. Having a similar pool allows the creators to enjoy excellent value for their creations. It also enables these creators to transact using cryptocurrency effortlessly.
NFTs afford buyers access to different forms of digitized assets, particularly cryptocurrencies. Owning these assets provides enough flexibility for growth. At the same time, NFT allows multiple buyers to have a stake in a single entity. Shared ownership is vital, mainly because of the increased value of cryptocurrencies.
Why are NFTs important?
Enthusiasts see NFTs as the future of ownership. All kinds of property – from event tickets to houses – will eventually have their own status tokenized in this way, they believe.
For artists, NFTs could solve the problem of how they can monetize digital artworks. They can receive more income from NFTs, as they can get a royalty each time the NFT changes hands after the initial sale.
NFTs could also transform music, sports, and gaming, NFTs’ proponents say.
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