In the same way cryptocurrencies reinvented money, NFTs are reinventing…. Pretty much every other item we interact with (and even creating new ones!).

Crypto tokens like Bitcoin (BTC) and Ether (ETH) and fiat currencies like the dollar and euro are fungible tokens. You can have one ETH and exchange it for any other ETH, or you can exchange a 100 dollar bill with any other 100 dollar bill.

On the contrary, non-fungible tokens or NFTs are crypto tokens that represent information of unique or rare digital and real-world assets. This information stored in each NFT makes them non-interchangeable on a 1:1 basis. An NFT cannot even be divided into smaller parts like other crypto assets or fiat currencies.

NFTs (Non Fungible Tokens) are unique or rare digital assets. They can represent anything from a digital work of art to an avatar skin, they can be a proxy for a physical object or grant you a piece of ownership to your favorite song.

We’ll shoot straight with you, NFTs would probably feel 100% less confusing if they weren’t called Non Fungible Tokens. Consider them to be unique digital objects that you can own, welcome to the era of digital ownership.

NFT. Three letters that represent a world of possibility and excitement. With Jay Z, Gimes, Tony Hawk and Steph Curry joining in the crypto-meets-art market, there’s an undeniable air of cultural intrigue in the space. You might’ve heard of crypto punks, bored apes or beeple artworks selling for millions of dollars! Confused? Let us tell you why.

Well, there are a couple of factors at play. The number one, most obvious one, is how NFTs unlock such creative potential – like nothing we’ve seen before for creatives and creators online.

Unlike most crypto use cases, NFTs aren’t just finance driven. The use-cases are not only broad, ranging from anything from sports and gaming, to digital fashion, music and art. They’re a creative technological instrument that unlocks the potential for creatives and entrepreneurs to retain full agency and monetize their creations via a direct connection to their audience. No more third-parties..

But the bigger, most exciting thing behind NFT adoption – and why this is so fundamentally important for the cryptocurrency industry as a whole – is linked to culture. The more we spend time online, the more our digital identities become as important as our physical ones. And this is where NFTs come into play; they're the Web3 vehicle for self expression and social currency.

You can think about it like this: NFTs are the arty brother of cryptocurrency, and the more people get to know the blockchain family, the more they get to see, experience, and enjoy the opportunities available.

If you want to create an NFT, you must first decide what digital media asset you want to be represented in an NFT. After doing so, the asset must be ‘minted’. This involves the use of a cryptographic key to secure the token which is created on a blockchain (simply put, a unique key is created and recorded on the ledger to represent the asset). The most popular blockchain for NFTs is Ethereum. The ‘digital media asset’ (for example, a video) is typically stored elsewhere (this is ‘off-chain’).

The cryptographic key, as recorded on the blockchain, is coded so as to contain details of the asset (metadata), verify whether a corresponding file is authentic (with links), confirm the identity of the owner, and many are also coded to contain standard smart contracts.

Once the NFT has been minted, the creator can list it on an NFT marketplace (for example, OpenSea or Rarible) for auction. Some NFT creators set up their own marketplace. A marketing campaign will be launched to promote the auction and those interested in the NFT will join the marketplace when the auction is live and place bids using their on-marketplace wallet which may hold cryptocurrency (like Ethereum) or fiat-currency. The successful bidder will exchange their funds and the NFT can then be transferred to their off-marketplace wallet.

NFTs can be resold on secondary markets hosted by NFT marketplaces or by directly selling to a buyer by transferring between off-marketplace wallets. All transactions are recorded on the blockchain and due to this being a distributed ledger each transaction is ‘witnessed’ by all ledger participants. In this way, there is a clear record of ownership.

Due to their protection from corruption, guarantee of authenticity and ownership, and non-fungibility, NFTs are becoming increasingly popular and have a wide range of uses.

Memorabilia and Collectibles – NFTs and their off-chain data are being used mainly in the arts, entertainment and creative industries. Sporting bodies, clubs, leagues, and sportspersons are utilising them to monetize digital player images, digital collectibles, and videos of famous sporting moments etc. Success stories include the NBA’s Top Shots marketplace, which has made over $700m in sales, and Sorare, an NFT fantasy football game with licensing agreements with several football federations, clubs, and high-profile players. By allowing ‘trading’ and resales, these marketplaces and their partners can continue to make profit over time through fees and royalties and also maintain some level of control.

Tickets – NFTs have been used for smart tickets (which are more than just digitalised tickets). Real Madrid are using NFT smart tickets to provide exclusive rewards to fans attending or watching matches. Kings of Leon released an NFT version of their album with ‘golden tickets’ that could unlock guaranteed front row VIP seats to one of their concerts.

Video Games – some creators have used NFTs and blockchain technology to develop video games, most of which are built upon collect-and-trade marketplaces. Axie Infinity is a video game based on NFTs where individuals buy and trade cartoon monster NFTs, each of which have unique traits and ‘powers’; these NFT monsters are then used in battles with other players. The current equity valuation of Axie Infinity is $3 billion, and its fully diluted valuation is $30 billion. Emojibles is a video game where players buy, trade and ‘battle’ Emoji NFTs. These games encourage competition between players by creating a hierarchy of NFTs with corresponding scarcity, and this fosters an active sale and resale market.

Digitised Metadata – Various musicians (like Grimes or Steve Aoki) have used NFTs to release music videos or songs that were not available on other platforms. Artists (like Damien Hirst and Andy Warhol) have also ‘dropped’ NFT collections. Many artists have indicated that using NFTs has been extremely cost-effective as the need for intermediaries is reduced. Additionally, musicians have started to adopt NFTs in order to make use of higher royalties from resales (following well-publicised complaints of low royalties from streaming platforms). There are many movies and TV shows that are also set to be released as NFTs. Also, the very first Tweet, on Twitter, was converted into an NFT.

Contract Verification – as NFTs are programmed using smart contracts in their code (with many using Ethereum standards), the code can include links to documents (like other contracts or deeds), require proof of identity, and confirm document authenticity (which is crucial where counterparties are used). This can minimise delays in property transactions.