Video game items and characters can be represented as NFTs, too, allowing for easy proof of ownership and portability even between games controlled by different companies (though the market for such games is still very immature). Digital artists are using NFTs to create “scarce” verified versions of their pieces, while collectible companies are using them to create traceable, unforgeable digital trading cards. These NFT contracts can represent pretty much anything that can exist digitally: a webpage, a GIF, a video clip, you name it. But those copies won't have the 'authenticity' of the actual NFT being sold. Etherscan currently lists over 9,600 distinct NFT contracts, each its own network of trust representing and tracking its own set of digital goods.Įnlarge / It's trivial to make a digital copy of any of the images for sale on Rarible. Just as anyone can start printing their own line of Certificates of Authenticity (or anyone can start up their own cryptocurrency to try to be “the next Bitcoin”), anyone with just a little technical knowhow can start minting their own distinct NFTs.

NFTs being “non-fungible” means each one represents a distinct entity with a distinct value that can’t be divided into smaller units. Each individual Bitcoin can be traded or divided up just like any other Bitcoin (i.e. With a cryptocurrency like Bitcoin, each individual unit is indistinguishable from another and has an identical value. What makes NFTs different from your run-of-the-mill cryptocurrency is each token’s distinctiveness. And just like cryptocurrencies, those NFTs can be sold and traded directly on any number of marketplaces without any centralized control structure dictating the rules of those transfers. Instead of a slip of paper, though, NFTs use cryptographic smart contracts and a distributed blockchain (most often built on top of Ethereum these days) to certify who owns each distinct, authentic token.Īs with cryptocurrencies, those contracts are verified by the collective distributed work of miners who keep the entire system honest with their computational work (the electricity for which creates a lot of nasty carbon emissions).

Perhaps the simplest way to start thinking about NFTs is as a digital version of the various “certificates of authenticity” that are prevalent in the market for real-world art and collectibles. This despite the fact that most of the general public barely understands how this blockchain-based system of digital authentication works, or why it’s behind people paying $69 million for a single GIF. So-called “non-fungible tokens” are having a bit of a moment in recent weeks, attracting a surge of venture capital cash and eye-watering speculative values for traceable digital goods. What Bitcoin was to 2011, NFTs are to 2021. It has been nearly 10 years now since Ars Technica first described Bitcoin to readers as “the world’s first virtual currency… designed by an enigmatic, freedom-loving hacker, and currently used by the geek underground to buy and sell everything from servers to cellphone jammers.” A decade later, Bitcoin and other cryptocurrencies are practically mainstream, and even most non-techies know the blockchain basics powering a decentralized financial revolution (or a persistent bubble, if you prefer).

Trade mania walkthrough