NFT stands for Non-Fungible Tokens — it stands for Non Fungible Tokens
A digital artifact that reflects real-world assets such as art, music, game products, and videos are known as NFTs. They are bought and sold digitally, sometimes with cryptocurrencies, and for the most part they are encoded with the same program as many other cryptocurrencies.
Even though they have been around since 2014, NFTs are gaining popularity as a more common way to buy and sell digital art. After November 2017, a staggering amount has been invested in NFTs.
Difference Between Fungible Tokens and Non-Fungible Tokens
The main difference between fungible tokens and non-fungible tokens is that fungibles are interchangeable, divisible, and uniform. In comparison, an NFT is not interchangeable, it is not divisible, and it is unique.
- Fungible Tokens are interchangeable with an equivalent type of tokens. Cryptocurrencies and fiat currency are examples of fungible tokens. On the other hand, Non-Fungible Tokens cannot be interchangeable with the same type of tokens. NFT can be an artifact, any digitally created art, and so on.
- Fungible Tokens are divisible, which means they are available in small units. For example, to buy bitcoin, it is not necessary to buy a bitcoin. You can also buy bitcoin in small units like 0.25. In contrast, NFT is not divisible and cannot be divided; If you want to Develop an NFT, you need to buy a full Token.
- Expendable Tokens are uniform, which means that each token has the same value when they are of the same type. On the other hand, NFT is unique; Each token is created differently and is not identical to each other in any way.
- Another parameter by which we can differentiate Fungible Tokens and Non-Fungible Tokens is Ethereum Token Standard. The standard interface of Fungible Tokens is done on ERC-20, and for a Non-Fungible Token (NFT), ERC-721 is used.
Understanding NFTs
Cryptocurrencies, like any real currency, are fungible, which means that they can be sold or exchanged for each other. One bitcoin, for example, is still worth the same as another bitcoin. Similarly one Ether is equal to another unit of Ether. Due to their fungibility, cryptocurrencies are ideal for use as a stable medium of exchange in the digital age.
NFT changes the cryptography model making each token unique and irreplaceable making it difficult to compare two NFTs. They are digital representations of properties that have been compared to digital passports and each token has its unique non-transferable identification that allows it to be distinguished from the others. They are also extensible, which means that a third NFT can be created by combining two NFTs.
NFT is like bitcoin, it has proprietary specifications that make it easy to identify and pass tokens between holders. In NFTs, owners can add metadata or facets related to assets. Fair Exchange Tokens, for example, perhaps used to represent coffee beans. Artists can also sign their multimedia art works in the metadata with their own name.
