Non-fungible tokens (NFT’s) are a blockchain cryptographic resource that distinguishes unique identification codes and metadata from each other. In contrast to digital currencies, these can’t be exchange or traded in equal. It differs from fungal tokens, such as cryptocurrencies, which are identical to each other and, therefore, can act as a medium for commercial transactions.
Like Bitcoin, token holders have NFT ownership details for easy identification and transfer. Owners can also add asset-related metadata or attributes to NFT’s. For instance, tokens addressing espresso beans can be delegated fair exchange. Or, artists can sign their digital artwork metadata with their own signatures.
The NFT changes the crypto paradigm by making each token unique and unchangeable, making it impossible for one non-fungible token to be paired with another. These are compare to digital representations of assets and digital passports because each token has a unique, non-transferable identity that sets it apart from other tokens. These are also extensible, meaning you can combine one NFT’s with another to “reproduce” a third, unique NFT.
Non-fungible tokens are an evolution of the relatively simple concept of cryptocurrency. Modern finance systems consist of sophisticated trading and lending for a wide range of assets, from real estate to industry loan agreements. By enabling digital representation of physical resources, NFTs are one step ahead in redesigning this infrastructure.
Non-fungible tokens are also excellent for identity management. Consider the physical passport that must be make at each entry and exit point. By converting separate passports into NFTs. It is possible for authorities to streamline entry and exit processes, each with its own unique identification feature. By expanding this use, NFT’s can also serve an identity management purpose in the digital field.
NFTs can democratize investment by fragmenting physical resources such as real estate. Sharing digital real estate assets between multiple owners is much easier. That tokenization policy will not need to restrict real estate; It may extend to other resources, such as artwork. Thus, a painting does not always require a single owner. Its digital equivalent can have multiple owners, responsible for a fraction of each painting. Such measures can increase its value and revenue.