What are NFTs or “Non-Fungible Tokens”?

A token is a digital asset. Non-fungible, or “non-exchangeable,” tokens represent specific items, making them unique—one-of-a-kind. NFTs are secured using blockchain technology. In simplified terms, a blockchain is a chain of digital data blocks. This technology adds key details to the digital item, such as the creator, price, or timestamp. This bundle of digital data forms a “token,” which documents ownership. Blockchains are virtually tamper-proof. Since tokenization documents ownership, NFTs are also well-suited as assets. Various items, such as artworks, real estate, music, domain names, or videos, can be digitized into NFTs. The possibilities are vast, as NFTs can represent almost anything and are not limited to one sector. For instance, real estate tokenization can split a property into numerous shares. This allows investors to acquire shares in the property at affordable rates. In the music industry, NFTs open new perspectives for artists and audiences. Investors can support artists by purchasing streaming shares, providing innovative investment opportunities. The profitability of such investments depends on many factors. Without sufficient demand, selling can be challenging. However, if demand is high, the value of a Non-Fungible Token can skyrocket in a short time—a prospect that excites investors.

Fungible Tokens vs. Non-Fungible Tokens

Unlike NFTs, “Fungible Tokens” can be exchanged for one another. For example, one Bitcoin can be exchanged for another Bitcoin, as they always hold the same value. Another example of fungible tokens is the cryptocurrency Ethereum. The same principle applies to cash: a five-euro note can be exchanged for another five-euro note. However, a five-euro note can also become unique, for example, by featuring a celebrity’s autograph, transforming it into an NFT.

Buying and Selling NFTs

To buy or sell Non-Fungible Tokens, you must register on a suitable platform. The most well-known marketplaces for NFT trading include Binance, FTX, OpenSea, Nifty Gateway, SuperRare, and Rarible. Purchasing NFTs often requires owning cryptocurrency, such as Ether. From these platforms, cryptocurrency can be transferred to a wallet, which can then connect to an NFT trading platform. Timeless, however, operates differently, allowing investors to acquire valuable assets without cryptocurrency.