Blockchain - A digital record-keeping technology in which all transactions are recorded on a public ledger and cannot be changed or altered.
Cryptocurrency - A digital form of payment that uses cryptography to secure transactions.
Fungible - The ability of a good or asset to be exchanged for another good or asset that is the same.
Non-fungible - A good or asset that is unique, one-of-a-kind, and irreplaceable.
Token - A unit of measurement used for cryptocurrency transactions. Depending on the cryptocurrency, a token can be either fungible or non-fungible.
Web3 - A new version of the world wide web that utilizes decentralization and blockchain technologies.
A very popular part of Web3, NFTs are unique, digital assets, that represent a form of digital art (music, images, in-game assets, videos, etc.) in which the data is recorded and verifiable on cryptocurrency blockchain technology. The blockchain technology permanently records all transactions, cannot be edited, and makes it possible to authenticate and track ownership of an NFT in real time.
Despite being “digital,” NFTs share characteristics with collectible items that exist in the real world. Just like other collectibles, an NFTs value is derived from its uniqueness and is determined by its popularity, scarcity, and rarity.
A video file or a picture file can be saved and downloaded by right-clicking the image, clicking “save” on a computer mouse, and viewing the saved file. While this can theoretically be done with NFTs, the actual ownership of the work exists on the blockchain and belongs to a single individual. That ownership factor cannot be copied and sometimes even comes with ownership of the copyright as well.
As previously mentioned, NFTs share characteristics with collectible items that physically exist in the real world. NFT ownership is can be thought of as that of a physical painting. While many individuals can own copies of a Leonardo da Vinci painting, only one individual can own the original painting.
If you’d like to inquire about starting an NFT project or receive consulting for an already established project, contact Givner Law and let us work with you each step of the way.