One of the most common questions people ask is whether non fungible tokens are a blockchain. Of course, we could give a short, direct answer to this question (spoiler: it’s no), but that would defeat the purpose. Whenever someone asks about non fungible tokens and what the heck do they have to do with Bitcoin blockchain or Ethereum blockchain, it means they are looking for an in-depth picture. So let’s dive straight into NFT VS Blockchain and ask: what’s the difference?
First things first: a non fungible token is a digital asset that exists on a Blockchain. That means, blockchain technology allows any nonfungible tokens to be registered and traded and any NFT platform to exist. Blockchain technology also enables crypto currencies to work they do, but one must not make the mistake to consider crypto currencies and nonfungible tokens the same beast.
Second: blockchain technology has wide use in many sectors, while nonfungible tokens are primary examples of digital art. Any digital item that can be traded and derives its value from rarity can be considered a potential NFT digital collectible.
Third: people can buy NFTs thanks to a digital wallet. Each NFT has a corresponding price in crypto currency which can be exchanged for the item. The nonfungible token operates as proof of ownership over the artwork or digital asset. However, to speak of somebody ‘owning’ blockchain technology would be ridiculous. That is because of the nature of the blockchain: it is a shared ledger that is completely decentralized and, therefore, cannot be in any way seized by single or multiple parties.
Fourth: NFTs and blockchain both operate through cryptographic security. That means each transaction and each token are stored safely on the blockchain which acts as a ledger – the archival collection of transactions. While the functioning of blockchain technology is complex, the bottom line is that each transaction is completely transparent and immutable to all, thanks to what’s called a smart contract. It’s completely secure because it is visible for all and it can’t be changed – it happened, it’s recorded, it’s there.
Fifth: Each NFT collection is unique, which means that each NFT collection has a specific place in a blockchain. Some of the most popular blockchains for NFTs include Ethereum and Solana. On the other hand, blockchains are not unique – countless of them can be created and their structure might change, but not their nature as a decentralized shared ledger. An NFT project can be completely different than another, maybe being audiovisual-based rather than a digital artwork.
As you can see, NFTs and blockchain technology have a lot in common, but also operate on different planes. They are both innovations that can change the world, one can be sure about that. But with a different scope and goal in mind. Some people are starting to call NFTs “crypto art”, but that is a reductive term. Nonetheless, as the NFT market reminds us every day, there is enough evidence that both nonfungible tokens and blockchain technology are revolutionizing the way we think about art and digital currency.
In short, they are opening a world where creators can sell their digital artwork for a fair price, where the fair price is regulated by the market operators themselves. Any NFT transaction is infinitely secure thanks to the blockchain where the NFT resides, and the possibilities are endless. For example, NFTs are becoming an increasingly useful tool when it comes to digital real estate and owning land in the Metaverse. The nonfungible tokens become fungible assets for anyone with a crypto wallet and enough trust in the system. And since an asset can be anything digital, only the future knows where this revolution will lead us.