Ric Demystifies Non-Fungible Tokens and Shares Examples of Real-life NFTs
One of the big things in our future: NFTs. You've heard of them. Non-fungible tokens. What on earth are they? Has anybody ever bothered to try to explain to you what an NFT is and what all the hubbub is all about?
Let me give you a real quick definition. Non-fungible token. Well, we can't talk about a non-fungible token until we talk about a fungible token, and we can't talk about a fungible token until we understand the word fungible. So let's break this down real simple and easy.
What does fungible mean? Interchangeable, that's all. So think about the dollars in your pocket. Let's pretend that I lend you a dollar. And a week goes by, and you pay me back with a dollar. The dollar you give me doesn't have to be the same dollar that I gave you. All dollars are fungible. They're interchangeable. They all have the same value. And it doesn't really matter which one we use in a transaction because they're all essentially the same. That's a fungible item. A non-fungible item is an item that is unique. It's not interchangeable. Non-fungible. Think of a Picasso. Picasso made many paintings, but they are all unique. Each of the Picasso paintings are non-fungible, so that's really all there is to it.
Token: A Unique Representation of Another Asset
Non-fungible token means a unique token. But okay, what's a token? A token is a representation of something else. You've heard the expression a token of appreciation. That means I hand you a rose as a demonstration of my love. That's a token, an expression of something else. A subway token. I want permission to ride the subway. I give a token to be able to get onto the subway. A subway token. So a token is a representation of something. So what is a non-fungible token? It's a unique representation of another asset.
In the digital world, imagine somebody creating a piece of art that they design on their computer. This art is unique. It's non-fungible, and because it's available only in digital form, it is a representation, a digital representation of that asset. So you see a lot of people creating artwork that they are selling on the Internet that are non-fungible tokens. They are unique pieces of digital art.
More than just Digital Art
You can also have concert tickets. Did you ever get a ticket from Ticketmaster or some other reseller where they send you a ticket and it's on your phone? Well, that ticket allows you admittance to that one event into that one seat. That is a non-fungible token. That digital concert ticket is the only one of its kind. Nobody else can sit in your seat while you're there. And so a digital concert ticket is an NFT, a non-fungible token. If you were to take your driver's license and turn it into a digital version of it, that too would be an NFT. And we are going to see in the future our passports and driver's licenses all become NFTs, non-fungible tokens - unique digital representations of our passport, of our personal identities.
So we're going to see an explosion of NFTs in the future because we can tokenize everything from our employment contracts to the deeds of our homes to our favorite cooking recipes. Some of these will be unique, such as the deed to my house. There's only one of it that will be a non-fungible token. Others will be easily replicable, like my favorite recipe. We can make copies of that over and over and over. Some will be fungible; some will be non-fungible. So an NFT is simply a unique digital version of some type of asset. And now you understand what an NFT is.
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