{"id":49960,"date":"2022-03-29T11:22:42","date_gmt":"2022-03-29T15:22:42","guid":{"rendered":"https:\/\/constantlegal.com\/?p=49960"},"modified":"2022-03-29T11:22:42","modified_gmt":"2022-03-29T15:22:42","slug":"what-is-an-nft","status":"publish","type":"post","link":"https:\/\/constantlegal.com\/what-is-an-nft\/","title":{"rendered":"What is an NFT?"},"content":{"rendered":"

\"\"A nonfungible token (NFT) is a unique digital code that represents a digital item such as art or music, as well as a growing number of physical items, that runs on the blockchain (a secure, decentralized, and cryptography-backed online ledger) and provides proof of ownership of virtual collectibles. That explanation may cause confusion, and when it comes to NFTs, confusion and excitement are present in equal parts.<\/p>

The sale of multimillion dollar NFTs over the last year has prompted growing interest in them\u2014and plenty of questions. Namely, what exactly are NFTs, how are they used, and why would anyone be interested in them?<\/p>

NFTs can generate new streams of revenue for creators and be a store of value for collectors. If you own NFTs or plan to invest in them, you should update your estate plan accordingly. Handing down an NFT is more complicated than passing on a physical item or other traditional asset. But with buzz building around NFTs, they could end up being among the most valuable items in your estate.<\/p>

What Is an NFT? <\/strong><\/p>

As the name indicates, the token is nonfungible. In other words, it is unique and cannot be directly replaced by, or exchanged one-for-one for, another token.<\/p>

Fungible assets are mutually interchangeable. They include things such as the US dollar and Bitcoin. One dollar bill can be exchanged for any other dollar bill; one Bitcoin is always equal to another Bitcoin. You can also break fungible assets down into smaller denominations, such as four quarters in exchange for one dollar.<\/p>

No two NFTs are the same; they cannot be replicated. Each token is one of a kind. But here is where things can get tricky: NFTs do not necessarily derive their worth from their uniqueness, even though that is part of their value.<\/p>

Typically, an NFT is linked to a specific digital item and serves as a sort of certificate of authenticity for that item. Tokenizing assets and putting them on the blockchain makes buying, selling, and trading the assets safer and more efficient.[1]<\/a><\/p>

NFTs represent and are used to sell the following types of digital collectibles and assets, among others:<\/p>