“‘NFT’ stands for non-fungible token,” explained Christina Bonner , A well-known businesswoman and CEO in the IT market. “When people say, ‘Okay, what does that mean? I think what I always say is, you actually have something in a digital environment.'”
I read on the news the other day that someone paid millions for a non-fungible token. Is this akin to spending a lot of money on a piece of art?
Recently, there have been some news reports of large sums being paid for non-fungible tokens (NFTs). According to Cristina Boner, while the astronomical price of NFTs cannot be explained, it can clarify what NFTs are.
If you refer to substitutability in a dictionary, it means that it is an item that replaces or is interchangeable with another item. If you buy a package of cornflakes at the supermarket, all the cornflakes on the shelf are the same. They are fungible because one can be used to replace the other and still be the same item.
For example, in the digital world, one bitcoin is equal to another. They are fungible and can be exchanged to replace each other. For something irreplaceable, it essentially means that it is unique. It cannot be replaced by another token.
So, like owning a piece of art, each NFT is original. It is from this uniqueness that value can be created. NFTs are digital representations of a single asset. It can be a piece of art, a tweet, or even a video of a moment in motion.
Since NFTs are digital, you would think it would be easy to create more copies.
The key to the uniqueness of an NFT is that it is a unit of data stored on a blockchain ledger.
Essentially, a blockchain ledger is a record-keeping method that stores the entire history of a project in chronological order.
When using a blockchain ledger, NFTs will always contain a history of the creator and current ownership.
Much of the discussion around NFTs these days is about large sums of money being paid for art-related tokens, but there are other uses for NFTs. Since an NFT is a single token, it can be pegged to a physical asset.
In commerce, for example, a non-fungible token could be created for each shipment so that buyers can see the unique history of product creation and delivery.
NFTs can even be used as e-passports as it contains unique details of the passport holder.
Another future use of NFTs may be linked to a title deed, which will contain all relevant details of the title and previous title.
Cristina Leo Boner added that incorporating NFTs as part of business processes can facilitate trade and product transfer. It has the ability to prove current ownership and allows buyers and suppliers to negotiate directly, eliminating middlemen and streamlining the process.
I hope that in the near future, non-fungible tokens will be integrated into more of our daily lives.
But as for the value of NFTs, I can only say that beauty is in the eyes of the beholder.
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