Non-Fungible Token
Non-Fungible Token
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Non-Fungible Token

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updatedSep 21, 2021
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A type of crypto token that is not interchangeable or replicable. It is used to represent scarcity items in virtual environments, in which the currency is the desired item itself.
A type of crypto token that is not interchangeable or replicable. It is used to represent scarcity items in virtual environments, in which the currency is the desired item itself.

Commonly known as NFTs, non-fungible tokens are unique digital items that can be sold, traded, and stored within the blockchain. The name "fungible" is derived from the fungibility of exchanging physical objects without modifying their value. The creation of NFTs is a way to ensure the uniqueness of a digital asset because it cannot be replicable and copied, which creates a limited availability of a commodity. When an item is non-fungible, its value is intrinsically connected to the item itself.

The use of non-fungible tokens within the gaming ecosystem is becoming ever more popular. It solves a fundamental problem regarding ownership of in-game goods. When a player buys an item inside a specific game, even if such an item costs money, it cannot be owned by the buyer because if the game developers decide to discontinue the platform, all in-game items will be lost. If the item is stored in the blockchain in the form of an NFT, it becomes genuinely possessed by the player, and it will continue to exist outside the game.

As NFTs represent a big market for collectible digital goods, artists are also taking advantage of NFTs to tokenize artworks to ensure ownership and distinctiveness to the pieces. Another use-case for such tokens is for the tokenization of physical assets, as it creates a digital counterpart of the physical good. Thanks to the immutability of blockchains, the tokenization of physical goods could be used to replace contracts automatically.

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