DPL 01: What is NFT?

An Introduction to NFT for Beginners

Jan 06, 2022

You guys must be hearing this word a lot these days.

It's in huge hype right now just how 10-12 years back, many people thought Digital Marketing and Branding was just a crazily and unnecessarily hyped profession.

But look at personal branding & digital marketing now, the most talked about and most popular field of work.

Similarly, many think NFTs are redundant, but guess what, it may even become like a full-time job for many.

Infact, it’s already for a lot of people since past couple of months now.

Mark my words, just like we trade shares, we will trade NFTs in future.

And it won't be limited to just trading and there will be much more to it.

Now before we explore further, let us 1st understand what NFT is.

NFT is a non-fungible token.

Now, if you are just a beginner and have heard the NFT term for the first time, let me break it down for you.

First, let's understand what’s the difference between fungible and non-fungible because this is for the first time after so many years in Internet that people are getting a little more confused.

Fungible means replaceable, which can be duplicated, which can be edited: something like money.

Say you needed Rs. 100 and I give you Rs. 100 (note).
Now when you want to return that Rs. 100, you don't have the Rs. 100 note, but instead, you have 10 of Rs. 10 notes, and I am perfectly alright with you returning the money in that way.
I don't want the same note I had given to you.
All I want is: Rs. 100!
This process of you NOT GIVING ME the same Rs. 100 NOTE but 10 of Rs. 10 NOTES is called fungibility/fungible form.

Basically, something that can be replaced or given in different forms is fungible.

Let's take a technical example here to understand Non Fungibility/Non Fungible.

In cryptocurrency, we have different coins like Bitcoin, Ethereum, Matic, Ripple, etc. all these are fungible items i.e. replaceable.

Now how are these Fungible?

Let’s take an example:

So, let's say you need 1 bitcoin from me today because you are need for some serious money for family emergency.

And today the price of 1 Bitcoin is around Rs. 38 lacs.

Now after 6 months, you come back to me & want to return money but you don’t have bitcoin in your wallet.

You have Ethereum & you can pay back the entire amount of Rs. 38 lacs in Ethereum based on that day’s Ethereum price.

So you return the entire amount by sending me around 12 ETH (38,00,000/306174 = approx 12).

So that is fungible.

And the exact opposite of replaceable is something that cannot be replaced or edited, and it is original, and that's called Non-Fungibility.

Let's say you get an artistic, unique, and very rare painting from a well-known artist.

Obviously, since it is the only painting and no other as such was made, it can be defined as original and irreplaceable.

Unfortunately, if your kid, friend, or anyone spills watercolours on it, it can't be replaced.

Let's take another example of Non Fungibility here.

If I have an iPhone which has the signature of Gary Vaynerchuk.

Now this phone might not be duplicatable because this lot of iPhones are available in the market. But if there is only one with Gary Vaynerchuk's original sign in the world then that's where this becomes non-fungible, i.e., unique.

That's NFT!

But in our case, NFT is in the digital art form, digital assets programmed on the blockchain network.

It can be on Ethereum network, Matic network, Solana network & much more…

Now let's go into a bit of technicality.

Let's understand how NFTs work.

Just as we need pillars as the support to build something, NFT is basically supported by these Blockchain technologies where Ethereum is the largest & the most trustworthy & Gold standard as off Jan 2022.

So here we will only take Ethereum as the reference.

Okay now how do you store these currencies?

These currencies are stored in digital wallets.

NFTs are also stored in digital wallets that you own.

And always remember: Never ever give your wallet's password or seed phase or private key to anyone.