By the time of Satoshi Nakamoto’s original 2008 paper “Bitcoin: A Peer-to-Peer Digital Cash System”, the concepts of “block” and “chain” had already appeared. When Bitcoin was first born, the underlying technology was what we define as blockchain technology.
Blockchain enthusiastart who are familiar with the history of blockchain must have heard about CryptoKitties. This game caused a lot of congestion on the Ethereum network in December 2017, leading to its transaction throughput reaching the highest level in its history. However, few people know that this is a perfect example of the successful use of non-fungible tokens (NFT).
A non-fungible token (NFT) is a unit of data stored on a digital ledger, called a blockchain, that certifies a digital asset to be unique and therefore not interchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files. Access to any copy of the original file, however, is not restricted to the buyer of the NFT. While copies of these digital items are available for anyone to obtain, NFTs are tracked on blockchains to provide the owner with a proof of ownership that is separate from copyright.
NFT represents a unique and irreplaceable asset, unique and indivisible. NFTs cannot be replaced with other tokens of the same type; they are defined by their unique information or attributes.
On the other hand, fungible tokens are defined as the equivalence of each unit of a commodity with other units of the same commodity. For example, if you have borrowed $100, you only need to pay back an equivalent of $100. It can be any $100 bill or 2 $50 bills, or you can transfer it via PayPal/Alipay/WeChat with the other currency or even cryptocurrencies such as Bitcoin, Ether or any ERC20 tokens.
By applying blockchain technology, NFTs are public and verifiable on the blockchain network. It creates a kind of digital scarcity that can be verified without central authorization to confirm the validity. This basic scarcity gives the token its value.
