NFT Introduction

What is an NFT?

An NFT, or non-fungible token, is a distinct digital asset stored on a blockchain. It can represent virtually anything and acts as a digital proof of ownership.

Fungible vs. Non-Fungible

To understand NFTs, it’s crucial to first grasp the concept of "non-fungible." Something is fungible if it can be exchanged for another identical item of the same value. For instance, a $1 bill is fungible—you can trade it for another $1 bill, and both are completely equivalent.

Non-fungible items, however, are one-of-a-kind and possess unique value. For example, two cars of the same model may have vastly different values due to factors like mileage, accident history, or if one was once owned by a famous person.

How do NFTs work?

NFTs are powered by blockchain technology, which functions as a vast, digital, and public ledger. Unlike traditional centralized systems, blockchains are decentralized and distributed across multiple nodes (essentially individual computers). This peer-to-peer structure ensures the blockchain is secure, tamper-proof, and operated collectively by its participants.

Every action involving an NFT—whether it’s creation, transfer, purchase, or sale—is permanently recorded on the blockchain. This system enables the verification of authenticity and ownership, making it possible to trace the entire history of an NFT.

The Role of Authenticity

Think of the blockchain as a secure, permanent certificate of authenticity. In the physical world, artworks or collectibles often come with paper certificates of authenticity, which can be lost, damaged, or forgotten over time. Blockchains solve this problem by providing a tamper-proof, easily accessible digital alternative.

For example, if you purchase a piece of digital art from a creator like Karasi, the blockchain will show the complete history of that piece: all previous owners, sale records, and even its original creation by Karasi. Without NFTs, verifying whether you’re buying the genuine piece or a convincing fake would be much harder. NFTs eliminate this uncertainty, offering a new level of transparency and trust.