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How do NFTs work?

Non-fungible tokens or better known as NFTs are digital files with a unique identity and a defined owner

Léelo en Español / 4-6 mins.


You may have already seen digital artwork sold for millions of dollars in the news lately. One example was the sale of the first tweet in history sold for nothing more and nothing less than 2.9 million. Now you wonder how?

The magic is in the non-fungible tokens or better known as NFT, they are digital files that have a unique identity and a defined owner , but the internet is very open and easy to replicate, so it translates to the exclusiveness.

NFTs use blockchain technology to certify their uniqueness and differentiate themselves from other digital files on the internet. The operation of the blockchain is similar to a notepad kept inside a safe. Transactions between individuals are recorded in this block and its content cannot be altered. Why? Because it can only be accessed and made a change if all the participants who write the document agree to do so.

This is the way bitcoin works, so both NFT and cryptocurrencies share a way of working and ensuring their authenticity : a whole decentralized community checks transactions and gives approval when there is any change in the book. It's the same with NFTs.

The difference between NFT and bitcoins is that bitcoin is limited and fungible, that is, you can exchange one bitcoin with another and both have the same value and price. NFTs are unique but unlimited and non-expendable, that is, there are no more than one. Although NFTs can be revalued, they cannot be exchanged for another NFT.




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