Crypto.com Application Writing Sample What are NFTs? Non-fungible tokens(NFTs) have been taking the internet by storm lately, and lots of people are wondering why. Let’s break it down! “Non-fungible” is another way of saying unique, or irreplaceable. This is the cornerstone of the identity surrounding NFTs! They are unique digital assets that hold value due to supply and demand, and they’re verified on the blockchain. Users can purchase NFTs in order to own digital versions of art, real estate, video files, and other forms of assets. The blockchain allows for secure proof of ownership, as well as proof of the transaction that ties the digital asset to your name. The majority of NFTs are built on the Ethereum blockchain, which allows users to set prices for their digital assets and transfer assets between ownership parties in a fast and secure manner. Additionally, real world use cases for NFTs are continuing to expand at an exciting rate, which will inherently increase the value and hype around digital assets as time goes on.
Why do NFTs have value? Much of the value surrounding NFTs is generated by a simple economic system: supply and demand. Does that sound too simple to be true? It’s not! Let’s look at some examples. When a digital art collection is released, NFT investors take interest in the product. This creates a high demand for the product. However, only 100 of the digital art assets were released! The finite number of NFTs released creates a short supply. As a result, investors are willing to pay more and more money to get their hands on one of the few, original pieces. These original pieces can be verified by the blockchain as a digital asset belonging to their name. Millions of people around the world have pictures on their phone of the Mona Lisa, but only one original painting exists. Thus, the verified original painting holds a lot of value! NFTs inherit even more value because their identity is verifiable by a secure ledger system, also known as the blockchain. As the digital asset space evolves and adapts, it will be interesting to follow along with the value of NFTs as decentralized finance continues to grow.