How Do NFTs Work?

NFTs are individual tokens that store valuable information.

Because they hold a value that is set by the market and demand, they are able to be bought and sold just like any physical piece of art.

Since NFTs contain unique data, the ownership of tokens and their transfer between owners can easily be verified and validated.

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NFTs exist on a blockchain, a distributed public ledger that records transactions.

It’s likely that you’re most familiar with blockchain as the technology that underlies cryptocurrencies.

NFTs are typically held on the Ethereum blockchain, though other blockchains support them as well.

NFTs are generated, or “minted”, from digital objects that represent tangible and intangible items, including

• Art
• GIFs
• Videos and sports highlights
• Collectibles
• Virtual avatars and video game skins
• Designer sneakers
• Music

Even tweets count. Jack Dorsey, the co-founder of Twitter, sold his very first tweet for $2.9 million as an NFT.

NFTs are essentially digital versions of physical collector’s items. The buyer gets a digital file rather than a physical oil painting to hang on the wall.

Exclusive ownership rights are also granted. That’s true: NFTs can only be owned by one person at a time.

The unique data of NFTs makes it easy for owners to verify their ownership and transfer their tokens. Owners and creators can store information inside them as well.

For instance, artwork can be signed by including the artist’s signature in the NFT’s metadata.

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Conclusion: How Do NFTs Work?

NFTs are individual tokens that store valuable information.

NFTs are generated, or “minted”, from digital objects that represent tangible and intangible items.