Demystify the tool of blockchain technology that is taking the world by storm.
For the Video Version, go to the end
What Does “Fungible” Mean?
When something is ‘fungible’ it means that it is interchangeable. Cartons of milk in a grocery store are fungible because any carton of milk will do. It doesn’t matter which one you pick up, you will get the same amount of milk. That is – as long as all the attributes of each carton of milk are the same. A carton of 2% milk is fungible with another carton on 2% milk. However, if you are watching your milk fat intake, a carton of 1% milk is “non-fungible” (or not interchangeable) with a carton of 2% milk.
NFTs in the Digital World
The digital world defines “things” in a similar way to how they are defined in the material world, using attributes that describe them. At CryptoMibs we define digital marbles using similar attributes to those of real marbles. There is a pattern, a material type, a place of origin, a size, and an image. The one difference is that since our marbles are NFTs, each one must be unique, so there is one additional attribute – the ID number, that make each marble non-fungible. Even if we were to make an exact replica of one of our marbles, they would each have their own ID to make them unique in indistinguishable from one another. Very much like identical twins – they share the exact same DNA, but they each have their own identity cards making the twins non-fungible.
NFT Super Powers
NFTs have Super Powers that give them super natural abilities in 3 key areas:
- Proving Ownership
- Tracking Items
- Confirming Supply
NFTs reside in communal networks (also known as blockchains) which means that every record on the network is logged and visible to everyone. So if you are the rightful owner of a marble, there will be a record linking you to the marble’s unique ID on the network to prove it. For example, I can go on the CryptoMibs site and purchase marble ID 2893 using my network account 0xDc45…6cb8. There is no way for anyone to verify that own this marble on the CryptoMibs site other than “My Mibs” page showing me that I own it. However, anyone can go on the network, look up marble 2893 and it will say that the owner of this marble is the owner of account 0xDc45…6cb8 (me!)
By adding a time dimension to the Proof of Ownership ability, NFTs have the equivalent of their own built-in GPS. This can be quite useful in many applications, even for a marble. By looking at the changes of ownership in an NFT over time you can deduce its value or usefulness for a specific application. For example, Llamacorn marbles are very valuable in CryptoMibs because they have booster powers in all of the games in the platform. I can look up the ownership history of Llamacorn ID 133 to see how often it exchanged hands and answer questions like: Has the marble been passed back and forth between the same players to inflate its value? Was it owned by each owner for a long period of time? All great questions to help make an educated purchasing decision.
Lastlly, NFTs are bound by the cumulative powers of the network in which they reside, making them ideal for the transparent reporting of it total supply. I can look up the total number of marbles that exists, as well as other interesting tidbits of data such as unique accounts that own marbles. Similarly, I can look up the total supply of any NFT I am interested in. Most NFT marketplaces will provide you with a direct link to this NFT data on the network so you can verify it on your own.
UP NEXT: USES FOR NFTS
So now you know that NFTs have super natural abilities to Prove Ownership, Track Items, and Confirm Supply. In the next blog we will see how these abilities can be used in real-life applications.