TAMPA, Fla. — If you're wondering what the heck an NFT is, you're in the right place.
NFT stands for non-fungible token.
"Non-fungible" means it's unique and irreplaceable.
Popular tech website The Verge explains it well. Basically, it says, a Bitcoin would be "fungible" because if you traded one coin for another, you'd have the same thing.
"A one-of-a-kind trading card, however, is non-fungible," The Verge writes. "If you traded it for a different card, you’d have something completely different."
You've probably heard somebody talk about Bitcoin or another cryptocurrency before. We'll spare you the details. But, essentially, there are a lot of cryptocurrencies these days. I bring it up because the one with the second-highest market cap is called Ether. And, that's relevant to NFTs.
Stay with me for a moment...
Ether is the native cryptocurrency on a blockchain called Ethereum.
A blockchain stores digital information in groups called blocks. When one block gets too full of information, it gets closed off and linked up to the block in front of it to form a chain.
Okay, but why?
Think about your life at home. You probably use a bank. That bank is basically the middle man between you and whoever you're sending money to.
A blockchain cuts out the bank. The blocks form a transparent, digital ledger that everybody can see. Built In, an online tech community, compared a blockchain to a Google Doc. Everybody can view it at the same time, and you can tell if it gets edited.
Again, we'll save you all the computer logistics. Just know that blockchains are decentralized but secure. I send you one thing, and everybody agrees it happened.
So, why did I just tell you all that stuff about blockchains? Because this Ethereum blockchain is special. In addition to handling cryptocurrency, it's the most well-known blockchain that also lets people create and exchange those non-fungible tokens or NFTs.
Frankly, an NFT can be almost anything, so long as the thing is digital. Thus, it can be handled through a blockchain. A recording of a song could be an NFT. So could a piece of graphic art. In fact, the digital artwork NFT market is booming.
And, we know what you're thinking...can't you just copy a piece of "digital art"?
But, if you bought an NFT, you've essentially bought a certificate of authenticity. Everybody can look and see that you own the original. Everything else is just a copy.
"To put it in terms of physical art collecting: anyone can buy a Monet print. But only one person can own the original," Mitchell Clark at The Verge writes.
Bottom Line: Thanks to a blockchain keeping everything transparent, I can buy an NFT and know I'm getting the real deal of whatever digital item I wanted.
And, this technology has some fairly unique applications.
For instance, let's talk about real estate. Houses aren't digital. They're physical. But, could a real estate transaction happen in NFT form? Experts say...yes.
Last year, an apartment in Ukraine was sold as an NFT.
Million Acres explains it happened like this: First, an LLC was created for the property. Second, a non-fungible token was set aside. Then, legal paperwork was developed that said whoever bought the non-fungible token, or NFT, had the rights to the LLC. The NFT was then auctioned, giving the winner the rights to the LLC, which ultimately meant the winner owned the property itself.
If you think that seems like an odd way to sell a house, you're not alone.
That same year, a California real estate broker tried and failed to sell a duplex as an NFT. His attempt was slightly different. CNN says the guy got a digital rendering of the actual home, with the plan of selling that as an NFT – and the house would just come along with it. The cable network says the auction closed within two weeks without a single bid. Other people didn't seem to share his enthusiasm.
Now, a property here in Gulfport, Florida, is being put up for auction with an NFT party. And, it'll be more like the sale in Ukraine that I mentioned earlier. The buyer will be buying an LLC, and thus own the home. If successful, it will be the first known successful NFT auction of a house in the United States.
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