People want to own something that’s completely unique, and the ability to purchase ownership of online assets opens up a whole new world of possibilities, but it also creates risks.
Here are some of the things you need to know when it comes to digital asset ownership.
What is an NFT?
First, NFT stands for “non-fungible token.” If you’re like most people, that doesn’t help much. Think of it as a digital certificate of authenticity.
To better understand what non-fungible means, it helps to first define fungibility, which is the ability to replace an item with one just like it. Basically, something fungible is interchangeable. For example, when you end up with four quarters, you might not want to carry them around because they are heavy and they jingle, so you might trade them in for a one-dollar bill. You have the same amount of money even though you traded metal for paper, four objects for one.
Other examples of fungible items might be frequent flyer miles, bitcoin or casino chips. Each can be exchanged for another item of the same value.
Something non-fungible is the opposite. It’s unique, not interchangeable with anything else. A great work of art has the author’s signature to authenticate it. A collectible car has a VIN. People can make reproductions of both, but they will never be the original.
With digital assets, it’s possible…
