Fungible vs non-fungible: what's the difference?
Before entering into the concert of what an NFT is, it is relevant to understand the nuance between a fungible and non-fungible element. Because it is their difference that sets the tone for the potential of this unique token. Fungibility is commonly used to qualify money. We then speak of a fungible asset when it is interchangeable with an asset of the same type. It is therefore not unique, has a value, but can be replaced by an equivalent of the same nature.
And on the contrary, a non-fungible element is not replaceable or substitutable.
An airplane ticket, for example, is a consumable object with a unique identification number.
By being associated with a name, a specific seat, a given flight, prevents its purchaser from substituting it with another plane ticket.
To achieve absolute fungibility, anonymity is also a sine qua none condition.
So with cryptocurrency, are we talking about fungibility or non-fungibility?
This is all the complexity and interest of Bitcoin, but also of NFT.
What is NFT?
Short for "Non Fungible Token", the NFT is defined as a token, or a digital asset issued by a blockchain. If we associate, for good reasons, NFTs with cryptocurrency, they are nevertheless very different. Due to its non-fungible nature, each token has its own unique identification code and cannot be reproduced. To illustrate, we can compare the NFT to a collectible card; by exchanging it for another card we will get something completely different. In this sense, an NFT redefines the value of objects.
Originally, NFTs were created on Ethereum and introduced through the ERC 721 proposal, serving as a standard for tokens.
While these non-fungible assets are not only limited to Ethereum, they are mainly used by this blockchain.
Used for a multitude of uses, the NFT is particularly popular with fans of digital art, collectibles, video games and sports.
One-of-a-kind operation
More concretely, an NFT depends on the platform where it was created. As a property, this type of token does not imply the authority of any third party and can be bought and sold without any authorization. In a way, NFT is just a digital image; a simple right click on it allows to save it. So why buy it? A collector will always prefer to acquire the card of his dreams rather than rent it. The NFT is based on the same principle and can generate excitement and take the same value over time. If anyone can view it, the uniqueness report remains. The NFT can serve as a certificate for real or digital goods. In short, it makes it possible to justify a purchase and to prove its authenticity.
Like any cryptocurrency, an NFT is bought and traded.
Except that the transactions of such a token take place on a different platform.
Rather, we are talking about a browser extension, Metamask being the most common.
This type of digital wallet makes it possible to interact with all the components of the Ethereum blockchain.
All tokens are created and stored there.
Once the extension is installed, it is possible to acquire an NFT by means of money market funds.
What to buy with NFTs?
This non-fungible token took a spotlight when Jack Dorsey, CEO of Twitter, put up for sale the first tweet in history with a bid of $ 2.5 million. More recently, Canadian artist Grimes sold his collection of digital works for $ 6 million, and a tweet mocking Donald Trump was sold for $ 6.6 million, the most expensive single work sold to date. We are talking about a notable revolution in the art world. Now, digital creation is identified and recognized as a unique work and can take on incredible value.
Beyond art, non-fungible tokens can be used for the possession of animated images, objects from video games or even pixels or moments of sport.
The NBA, for example, offered short videos of matches certified by the NFTs.
Like digital trading cards, some are of little value while others are in demand and can generate thousands of dollars.
NFTs today have applications that go beyond the same internet or collectible cards.
The integration of these tokens in the fields of art, but also of decentralized finance allows them a legitimate reputation.
Like cryptocurrency, an NFT involves great security, fewer middlemen, and complete decentralization of processes.
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