What is a Nonfungible Token (NFT)?
26 July 2021
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Nonfungible Tokens (NFT) are tokens that state ownership of virtual assets such as images, videos, music, or text. Due to the blockchain technology, no copies may exist.
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Nonfungible tokens (NFT) are tokens that state ownership of virtual assets such as images, videos, music, or text. The NFT is registered onto a blockchain — such as Ethereum — which only one person can hold at a time. Therefore each NFT is a uniquely tradable digital asset, and due to blockchain technology, no copies may exist. What makes an NFT unique is its fingerprint, which is made possible by a hashing algorithm. Hashing is the process of transforming input to a deterministic output — the same input will always lead to the same output; however, a slightly different input has a significant different output. The output may look like a random sequence of characters, but it is not, making it possible to create unique fingerprints of any virtual item. Due to hashing properties, the fingerprint has a one-on-one relation with its original item; therefore, owning a specific fingerprint also means owning the original item. And by selling the fingerprint, the ownership is also sold.
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