# What is an NFT?

## “NFTs are a scam”
You might have heard this quite a lot.

NFTs seem to have taken over the internet, but what exactly are they? Are they a scam? Can anyone buy one? And, above all, should you buy an NFT? Allow us to explain it all.

NFT is an initialisation, short for non-fungible token. If you're wondering what on earth 'fungible' means, we don't blame you. Unless you're big into investing in the stock market, you may not have ever heard the word before.

## Fungible
Let's start by defining 'fungible'. If something is fungible, it means that, for all intents and purposes, one unit of it is identical (and of equal value) to another. Oil, gold and money are all examples of fungible items. For instance, two £5 notes are the same as one another, holding the same value and having the same use.

It's not just tradeable assets that are fungible. Lots of everyday items are fungible too, like bottles of milk in the fridge in the supermarket. Assuming they're all unopened, the same volume and the same type, each bottle is exactly the same. As a result, they all cost the same too.

## Non-Fungible Assets
So, if fungible things can be replicated and are of equal value, the opposite must be true of non-fungible things: no two versions of a non-fungible object can be the same, and their values differ accordingly.

A non-fungible token is just another example of something that is unique, irreplaceable and interchangeable – except, crucially, NFTs are digital assets that can be bought or sold.

When you buy an NFT, blockchain technology allows you to have what essentially amounts to a certificate of authenticity, meaning that you know you own it. Other people can take a screenshot of an NFT but, unlike the person who bought it, they won't have any proof that they own the original version. Only the person who purchased the NFT has that.

As for the point of buying an NFT? Well, that leads us neatly onto the next big question...

## Are NFTs valuable?

Part of the reason NFTs have become so well-known is that a small minority have sold for eye-watering sums. And, as with many new phenomena, people have questioned just what value there is in owning an NFT – particularly as, in the case of NFT art, a screenshot often looks exactly the same.

It's far from a perfect comparison (as we'll explain shortly), but it can help to think of NFT art in the same way as physical art. Let's take the Mona Lisa as an example.

There are countless replica prints of the Mona Lisa in existence. Go on sites like Etsy or Amazon and you'll find thousands on sale, with some going for as little as £3 or less. The quality can leave a lot to be desired but, as you might expect, the more you pay, the better they look.

Depending on the price, you could even end up with a replica print that – to most casual observers – looks identical to the original Mona Lisa. But, unlike the actual Mona Lisa, your replica won't be worth $870 million (the most recent estimate for the insured value of the painting).

The reason is that no matter how good your replica print is, it still isn't the Mona Lisa. And the same applies to NFT art: you can take a screenshot of one, but you can't say that it's yours unless you bought it and effectively own the receipt.

## How do NFTs work?
NFTs are data units that are kept on a blockchain digital ledger. Each non-fungible token serves as a type of authentication certificate, demonstrating that a digital asset is distinct and not interchangeable. Because of the cryptographic principles that distinguish the blockchain, an NFT can never be modified, amended, or stolen.

NFTs enable the assignment or claim of ownership of any unique piece of digital data, which may be tracked using Ethereum’s blockchain as a public ledger.
NFT minting is done as a representation of digital and non-digital assets.
NFTs are unique tokens that are part of the Ethereum blockchain and include additional information.
The essential element is the extra information, which allows them to take the shape of art, music, video, and so on.
They may be purchased and sold like other forms of art because they have value – and, like with physical art, the value is mainly determined by the market and demand.
Note that, copies of an NFT are still legitimate portions of the blockchain in the same way that art prints of an original are created, used, bought, and sold - but they will not have the same value as the original.