What are Non-Fungible Tokens?

Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, NFTs cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can be used as a medium for commercial transactions.

The specific construction of each NFT has the potential for different use cases. For example, they are an ideal vehicle to digitally represent physical assets like real estate and artwork. Because they are based on blockchains, NFTs can also be used to remove intermediaries and connect artists with audiences or for identity management. Non-fungible tokens can remove intermediaries, simplify transactions, and create new markets.

NFTs will be available to Electra Protocol with the release of the smart contracts functionality. The ecosystem will be a perfect place for NFT solutions, since its ecosystem is built for instant transactions at almost zero cost.

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Key Takeaways of NFTs

  • NFTs are unique cryptographic tokens that exist on a blockchain¬†and cannot be replicated.
  • NFTs can be used to represent real-world items like artwork and real-estate.
  • “Tokenizing” these real-world tangible assets allows them to be bought, sold, and traded more efficiently while reducing the probability of fraud.
  • NFTs can also be used to represent identities of an individual, property rights, and more.

The release of the upcoming smart contracts platform will enable NFTs on Electra Protocol and a number of other use cases.