By Priyanka Singh

A group of crypto enthusiasts (people who are interested in buying and selling
of digital assets e.g., currency or art), belonging to a blockchain company bought a painting named ‘Morons’ for US $95,000, made by a mysterious artist named Banksy. Only to burn it!

The entire spectacle was live streamed on internet and at the end of the performance a digitized copy of the painting was unveiled to be bought as an NFT.

So, what exactly is NFT?

It stands for Non-Fungible Token. In simple terms, Fungible things are replaceable or when substituted or exchanged hold the same value e.g., both digital and physical currency, gold, etc. Non-fungible assets are unique and therefore nonreplaceable e.g., a painting, art, house, trademark, etc. Token is a digital certificate of the proof of ownership of something that you cannot touch or feel. NFTs are unique digital assets. They are bought using Ethereum cryptocurrency. They are stored and protected on shared public exchange database i.e., Ethereum Blockchain.
NFTs are not just limited to artwork, they can be a piece of music, a book, a GIF, a meme, a game, an anecdote, a poem, a jpeg, etc.

Anything which can be posted on the internet can become an NFT. When an aforementioned digital work gets sold on the blockchain, it becomes a crypto collectible. Since it is non-fungible, it cannot be exchanged for something of comparative value.

Ethereum is a cryptocurrency like Bitcoin. Most of the NFT transactions are done on the Ethereum Blockchain.
Worldwide, more than $2 billion were spent on NFTs in 2021.

Why are people going crazy over NFTs?

Logically, it doesn’t make sense.
An NFT essentially gives a person bragging rights of owning something. For example, the National Basketball Association in the US sold a videoclip of Lebron James (basketball player) going for the winning dunk for his team for $230,000.

The video is freely available on YouTube for everyone to see. The token or the proof of ownership does not give any more than bragging rights to the buyer. So, why invest in something that is so elusive?

Beats me! But it has opened a global market to artists, authors, musicians, meme makers, etc. who can now post their work on online platforms like OpenSea and Rarible and wait for some crypto enthusiast to buy their work.

Blockchain and NFTs

Suppose you buy 100 Ethereum. To buy them, you will have to make a request on a secure public exchange system where a group of computers will validate the transaction and add 100 Ethereum in your account. This bunch of computers keep track of every single cryptocurrency transaction that takes place all around the world.

Now, if you want to buy an art-piece like ‘Banksy’s Morons’, you will have to make another request on the blockchain to validate your transaction. A number of computers will again go through all your previous transactions to find out if you have enough Ethereum to buy the painting.

The public record of cryptocurrency transactions is called blockchain. The digital artwork that you buy using blockchain is called an NFT.