Nft non fungible token
- #NFT NON FUNGIBLE TOKEN SERIAL NUMBERS#
- #NFT NON FUNGIBLE TOKEN SERIAL NUMBER#
- #NFT NON FUNGIBLE TOKEN SERIAL#
The primary function of a blockchain network is to get all the participants to agree on a single shared "state of the world". The differences hinge on a few core properties of the blockchain design. What makes an NFT different from an animated GIF file on someone's website, or from other kinds of digital records like a spreadsheet? However, by existing on the same networks that enable digital currency, NFTs can leverage the payment and account infrastructure for transactions and benefit from the security guarantees of the blockchain. Of course, there's a good reason we don't conduct business by swapping priceless Picasso sketches around! Without fungibility, an NFT isn't much good as currency. The same NFT may be valued completely differently by different people, based on factors like aesthetic taste or the identity of the creator. The value of an NFT is thus highly dependent on the data it contains and represents.
In the same way, by allowing each token to contain a small amount of arbitrary data, NFTs become a medium for creative expression, as well as a unit of exchange and account. While you could technically redeem it for a dollar's worth of snacks, the exchange value of the bill is now far greater than one dollar. By using it as a medium for artwork, our imaginary Picasso has made the bill less fungible.
#NFT NON FUNGIBLE TOKEN SERIAL#
However, a dollar bill that's been sketched on by Picasso is unique in a way that has nothing to do with serial numbers. A unique identifier alone is not enough to make something non-fungible. Even though you can tell them apart, two dollar bills are still fungible because they each have the same value as currency.
#NFT NON FUNGIBLE TOKEN SERIAL NUMBERS#
# What makes a token non-fungible?Įarlier we mentioned serial numbers as a way to distinguish one dollar bill from another. The result is a token that can't easily be exchanged with another arbitrary token of the same type, or a non-fungible token. Most early smart contracts defined fungible tokens similar to Ether, but people quickly began experimenting with using tokens to contain data, making each token unique and distinguishable from the rest. However, the smart contract computation model allows developers to create their own tokens, which can have special properties according to the logic in the contract. Ethereum added general-purpose computation to the blockchain consensus model pioneered by Bitcoin, positioning itself as a "world computer" enabling "programmable money."Įthereum has a native token called Ether, which is used as both a store of value and to pay for computation in the form of fees called gas. The most significant for NFTs was Ethereum, where the concept of NFTs was first developed. Instead, the system just keeps track of the quantity in each account, crediting one account and debiting another with each transaction.īitcoin inspired a host of other blockchains that iterated on the same basic idea and introduced new capabilities.
#NFT NON FUNGIBLE TOKEN SERIAL NUMBER#
Whereas cash at least might have a serial number to distinguish one bill from another, the Bitcoin network doesn't track coins individually and assigns them each an identifier. In fact, at a technical level, there's not really such a thing as "a single Bitcoin" with its own identity.
Like traditional cash, Bitcoin is fungible, meaning you can replace one Bitcoin with another Bitcoin without changing the value of either.
The Bitcoin network has a single token, named "Bitcoin." Bitcoin's whitepaper (opens new window) introduced a "chain of blocks" to track and secure the history of the system over time, and the term "blockchain" caught on as new networks built on the idea. The most famous blockchain is the one that coined the term.
To understand what an NFT is, we just need a bit of background knowledge. We won't get into all the details of how blockchains work here. Before we get into "non-fungible," what do we mean by "token"? For our purposes, a token is a kind of record in an information system called a blockchain. This page defines what an NFT actually is in the abstract, while also looking at a few specific examples of NFT applications and use cases.įirst, let's break down the name. NFT stands for non-fungible token, which doesn't explain very much.