Non-Fungible Tokens (NFTs) are a type of digital asset that represents ownership of a unique item or piece of content. Unlike traditional digital assets, such as cryptocurrencies, which are interchangeable and have the same value, NFTs are unique and have different values. They are often used to represent digital art, collectibles, and other unique digital items.
How Does NFT works?
At a very high level, most NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, like bitcoin or dogecoin, but its blockchain also supports these NFTs, which store extra information that makes them work differently from, say, an ETH coin. It is worth noting that other blockchains can implement their own versions of NFTs.
How are NFTs traded?
Like cryptocurrencies, NFTs are bought and sold on specialised platforms. OpenSea is the best-known NFT marketplace. To purchase an NFT, the wallet must contain enough of the relevant cryptocurrency -- for example, ether (ETH) if the person is buying a token on the Ethereum blockchain. With a little technical know-how, it is also possible to make, or 'mint', your own NFT. Ultimately, NFTs are digital contracts, with certain rules embedded such as the number of copies available for sale.