What is non-fungible token and why is it becoming so popular?

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Non-fungible token (NFT)-backed digital art is a buzzing word in the cryptocurrency world these days. Twitter co-founder Jack Dorsey has put up his first tweet as an NFT for sale, which may sell for $2.5 million as per the latest bid. So, if you are wondering about this new crypto asset here is the lowdown:

What is NFT?

In the physical world, you can simply go and buy a painting, which you wish to hang on your wall. You pay the artist and you become the owner of the painting. Now, you can also become the owner in the digital world through NFT or non-fungible tokens. Through NFT every digital collectable is given a unique code making it one-of-a-kind work of art. In simple words, you can say that NFTs is a digital certificate, which establishes absolute ownership of digital artwork.

What is common between cryptocurrency and NFT?

NFT and cryptocurrency works on the technology called Blockchain. Blockchain works on the principle of a distributed ledger. When you send bitcoin to someone else than a ledger entry is made which is verified by bitcoin miners.  When NFT is created for any digital collectable a unique code is given and is put up on the blockchain. Now when you transfer an NFT the unique code also gets transferred to the other person on the blockchain.

Why pay so high value?

Recently on March 12 a person named Beeple sold an NFT at first of its kind auction at Christie’s. He sold his digital artwork called “Everydays: The First 5000 Days” for a huge sum of $69.3 million or Rs 501 crore. The question is when you and I can download any painting, why spend such jaw-dropping numbers to buy them. Well you can have a copy of Mona Lisa but the real owner of the painting remains only one. Similarly, only Metakovan (the buyer of the art) will be the owner of the original artwork of Beeple as certified by the NFT.

What is the future of this technology?

Recently Zebpay, which is a cryptocurrency exchange, has already announced to launch an NFT platform for digital art and collectables. With so much interest generated in NFTs it seems beginning to take off and experts say in future its role will not be limited only to digital collectables.