NFT tokens stand for non-fungible tokens and have become a real hype in the global crypto market since the beginning of 2021. The tokens are characterized by a unique property and therefore cannot be replicated. This makes them applicable to demonstrate the ownership or authenticity of a certain product. Together they are part of the rich collection of altcoins that exist alongside Bitcoin.
What is the difference between non-fungible and fungible tokens?
Fungible tokens, unlike non-fungible tokens, can be replicated. These can be made as they were and exchanged. That’s because every token represents the same value. Consider, for example, the dollar or a ticket for a sports match. Both dollars and tickets can be created if necessary, and are freely interchangeable between people. That sounds easy and it is, but it does have certain disadvantages. Printing dollars will eventually lead to inflation, causing money to lose its value.
Tickets for sports matches are freely interchangeable, which makes them susceptible to fraud. How do you know that your ticket is not counterfeit? And has not already been resold to another buyer? To combat these problems, non-fungible tokens have been developed.
In summary, the differences between non-fungible tokens and fungible tokens are:
- Non-fungible tokens cannot be replicated. Fungible tokens do.
- Non-fungible tokens are not divisible. Fungible tokens do.
- Non-fungible tokens represent a unique value. With fungible tokens the value is the same.
How did NFT tokens come about?
They have been around for a while, but only since this year have the tokens really become widely known. In 2017, the first fame came from the game CryptoKitties. Players could use tokens to breed and trade cats. A year later we saw the first online marketplaces emerge where tokens can be traded. Since then they have also become accessible to investors. In 2019, the tokens came into the spotlight for the first time when major brands such as Nike and the NBA announced their intention to do something with NFT. This has created a real hype among crypto investors since 2020. Since this year, the supply of tokens has increased enormously and millions of dollars worth of NFT-related tokens are traded at crypto exchanges every month.
What are NFT tokens used for?
Non-fungible tokens can be used for the following:
- As a unique proof of ownership of products or goods.
- As proof of authenticity of art, for example.
- In the gaming industry for producing, trading and collecting online items.
- For the production of licenses and certificates.
Where can you buy NFT tokens?
You can buy them at the well-known crypto exchanges. See which brokers are best for buying crypto and NFT tokens. It is important that you first research the token you would like to purchase. Anyone, including people with bad intentions, can release tokens on a blockchain. So take a good look at which team of developers is behind the token, and what the experiences are of other buyers.
You can buy NFT tokens on a centralized exchange or a decentralized exchange. The supply is often larger on a decentralized exchange. This is because there is less control over the release of the tokens. This therefore entails risks. An advantage is the offer of lesser-known projects that therefore have a potentially high return. Both Binance and Bitvavo have a wide range of NFT tokens for sale.