Non-fungible tokens (NFTs), have seemingly taken the digital world by storm.
Last year the industry experienced a 21,000% increase in trading volume to more than $17 billion, according to a report from Nonfungible.com.
The history of NFTs goes back to 2014 but it wasn’t until 2021 that a multitude of investors, celebrities and high-profile people entered the NFT world. NFTs went viral last year possibly when former Twitter Inc. (NASDAQ: TWTR) CEO Jack Dorsey sold a tweet as an NFT for $2.9 million.
While the NFT craze spread like wildfire, some people found it hard to understand what they are. This article explains five things you need to know to understand NFTs.
Non-Fungible What?
A non-fungible token is a unique digital asset that cannot be replaced by any other identical asset. NFTs are kept on the blockchain system — the same architecture supporting cryptocurrencies — with a unique and encrypted identity code that makes them different from each other.
1. What Makes NFTs Different From Cryptocurrency?
NFTs are similar to cryptocurrencies such as Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) because they run on the same system architecture, but their similarities somewhat end there. Cryptocurrencies are fungible, meaning they can be traded or exchanged for another. They are also equal in value — one Bitcoin has the same value …
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