Over the past few weeks, articles, memes and even a Saturday Night Live skit introduced the world to NFTs. So what is an NFT? In short, a non-fungible token, or an NFT as it’s more commonly known is a unit of data established on a blockchain representing a type of distinctive digital file, according to The Verge. When someone “mints” or creates an NFT on a blockchain, they code a piece of data that cannot be manipulated or destroyed, according to JDSUPRA. A blockchain is an online publicly available ledger where codes get sent to each person on the network in order to verify the validity of the information, usually a transaction is what’s getting verified, according to EuroMoney.
The fungible component of an NFT relates to an item’s ability to be mutually interchangeable. The non-aspect to non-fungible means that an item is somewhat unique and not mutually interchangeable. In other words, you cannot replace the digital file with an identical file which also relates to how one would mint an NFT. Finally, we have the token piece and one way of thinking about the token piece is that it’s a visual representation of the media that’s being codified on the blockchain. Another way of thinking about the token aspect to NFTs is that it could be a voucher to be exchanged for some type of currency.
Combining these definitions you have an NFT, a piece of indestructible, and non-alterable digital information that there’s only one of and which corresponds to a specific address on the blockchain in use. Anything from a poster of the Don Corleone with his cat, to a twerking Thanos meme could effectively become an NFT.
So why does it matter? According to Matt Stephenson, an expert in NFT and behavioral economics, it could change how humanity views the way we perceive value, not only in the functional sense of “how can the owner use an item to get what they want?” but “how does the story behind this item give the owner a type of street credibility?”