What are non-fungible tokens and how do they work?

What are non-fungible tokens and how do they work?

What is a non-fungible token?

Non-fungible tokens (NFTs) are a new solution to a problem that is as old as the web: the endless replicability of digital information online. When bits, files and pixels can be copied and pasted with a few clicks, analogue concepts such as ownership, originality and access control often go out of the window, as anyone who worked in the music industry during the heyday of streaming service Napster knows.

Non-fungible tokens use blockchain technology to certify the authenticity and ownership of a specific and unique digital object. Blockchains are the same basic technology that underpins a range of cryptocurrencies, including bitcoin. While one digital coin is the same as another (or “fungible”), each NFT is a one-off with one certified owner, even if the associated file can be copied. What bitcoin is to the US dollar, an NFT is to the “Mona Lisa”. Anyone can buy a print of the “Mona Lisa”, but there is only one original hanging in The Louvre (and an NFT can be more than just an artwork, but more on that later).

What are the most popular kinds of NFTs?

The iconic works of the early NFT era look rather different to Leonardo da