What Are NFTs and How Do They Work?

Beginner

Non-fungible tokens (NFTs) are a special type of crypto asset that allows holders to prove their ownership of real or digital items – but most importantly, the latter.

These intangible items can include things like plots of virtual real estate in games like The Sandbox and Decentraland, to digital artwork like Beeple’s Everydays - The 2020 collection, and even images of cartoon apes.

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While this might sound pretty underwhelming to the average person, you need to appreciate that in today’s ever-increasing digital world it’s incredibly difficult to authenticate or exercise ownership over things that anyone can simply screenshot, copy or download.

Imagine you’re a concept artist who creates digital artwork for gaming companies like Ubisoft or Treyarch. Now imagine you want to go it alone and sell your digital artwork online. To achieve this, you’d need to find some way of marking and tracking ownership of your pieces so that purchasers could prove they had original pieces and not just some screenshot. Otherwise, what’s the point of spending your money on it?