What is NFT？

The full name of NFT is Non-Fungible-Token, which corresponds to FT (Fungible Token). NFT refers to is a unique, non-interchangeable token that cannot be split.

It sounds abstract. Let’s explain FT first. FTs are tokens like Ethereum, Bitcoin, etc. If I have one Bitcoin and exchange it with one of your Bitcoins, it won’t affect its value at all, I still have a Bitcoin. Just like the RMB 100 in my hand and the RMB 100 in your hand are the same and are interchangeable, if you don't consider the unique code on them.

But if I have a concert ticket and you also have a concert ticket, I may not be willing to exchange it with you, because the seat of my ticket and yours must be different. It is possible that mine is in the front row, while yours is in the back row. The seat number is clearly written on the ticket, and there is a clear difference between the two tickets.

NFTs are similar to concert tickets because each NFT is unique. Besides, unlike Bitcoin or Ethereum, which can be split into 0.1 or 0.01 Bitcoin or Ethereum, NFTs are indivisible. Just like a concert ticket, you can’t get in if you only have half of it. So, what are the functions of NFTs?

An NFT is a crypto token on the blockchain that represents a unique asset. It can be a digital asset or the tokenized version of a real-world asset. Since NFTs are non-interchangeable, they can serve as proof of authenticity and ownership in the blockchain.

Interchangability or fungibility means that each unit of an asset is interchangeable and essentially indistinguishable from the other. For example, fiat currency is fungible because each unit is interchangeable with other equivalent units. A 10-dollar bill is interchangeable with any other real 10-dollar bill. This is an essential property for assets designed to serve as a medium of exchange.

Fungibility is a desirable property for currency because it can be exchanged freely and, in theory, the history of each individual unit is untraceable. However, this is not a beneficial property for collectibles.

What if we could create a digital asset similar to Bitcoin, but add a unique identification code to each unit? This will make each unit distinct from the other (ie, irreplaceable). Essentially speaking, this is NFT.