Since the colossal rise in popularity of cryptocurrencies such as Bitcoin and Solana in the early 2020s, Non-Fungible Tokens (NFTs) have been a central part of the discourse. However, several years have passed since the initial boom in ubiquity and popularity in the global marketplace, and cryptocurrency seems to be evolving to more adeptly fit the times, while NFTs have remained largely the same. 

What Are NFTs Anyway?

Non-Fungible Tokens (NFTs) are unique digital assets which are stored and managed on a blockchain. A blockchain is a decentralized digital ledger technology. In theory, this means that each respective NFT is distinct in its own right and entirely incapable of being duplicated or replaced. While cryptocurrencies such as Bitcoin or Ethereum are distinctly fungible (capable of being exchanged one-to-one), NFTs are not.

Instead, NFTs have become representative of one-of-a-kind media or assets, leading to the sale of artwork, collectibles, and other forms of digital media via NFTs. Each NFT is engineered to contain hyper-specific metadata that verifies information such as its authentic ownership history. In this way, the NFT itself should be able to provide an indisputable record of ownership.

Fungibility vs. Non-Fungibility

Cryptocurrencies like Bitcoin are fungible. This means that each unit is identical and interchangeable with any other unit of the same value. In this way, you can think of Bitcoin as equivalent to an American quarter: any one quarter’s value will be equal to the value of any other quarter. Every quarter is made the same way, and so, too, is every unit of Bitcoin. One Bitcoin is equivalent in value to any other Bitcoin. While Bitcoin price may ebb and flow over time, no one Bitcoin will ever be worth more than an equal unit of Bitcoin.

In stark contrast, NFTs are engineered to be original and one-of-a-kind. Their implicit lack of fungibility is such a selling point that it is literally in their name. No one NFT will be equivalent to that of another NFT because each NFT is distinctly its own thing, valued at its own unique price-point.

How Can NFTs Be Used?

While cryptocurrencies like Bitcoin are generally interchangeable across different platforms and wallets, NFTs are often specific to particular blockchain networks or marketplaces. However, efforts are underway to improve interoperability and enable cross-chain compatibility for NFTs, allowing them to be transferred and traded more freely between different platforms and ecosystems.

NFTs are often more akin to visual media than they are to money itself. CEO and co-founder of Danvas, Jeanne Anderson, is actively working to bridge the gap between the perception of NFT art and the art community. Anderson has worked in the art space for many years before delving into the world of digital art, which she deemed a natural transition, “Once I started to see all of the excitement and the opportunity in the NFT and digital art workspace, given the marriage of my tech background and my love of art and having worked in art sales, it made a ton of sense for me personally to make the transition.”

NFT Art as Art 

But it hasn’t all been easy, with several aspects of NFTs and their correlating visual media falling into distinctly unlegislated territory. Hackers have been able to invade the NFT scene, as they have the ability to steal digital artwork and even hold it for ransom.

Cryptocurrency has a vast array of possibilities before it, with Bitcoin, Solana, and NFTs still very much evolving before the general population’s very eyes. There’s no telling what the future may hold for NFTs.

This post was authored by an external contributor and does not represent the opinions of “Stocktwits” and has not been edited for content.  The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. “Stocktwits”  does not make any recommendation to buy or sell any security or any representation about the financial condition of any company.

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