As non-fungible tokens (NFTs) have gained widespread attention over the past two years, many people have found themselves puzzled by the function of these tokens. Although these digital assets sometimes sell for tens or even hundreds of thousands of dollars, anyone can copy the files they represent simply by saving them as JPG files on their own computers. Nevertheless, there are crucial advantages to owning an NFT. Here's what you need to know about the differences between NFT ownership and simple saving a JPG.
NFTS and Proof of Ownership
The fundamental difference between having a non-fungible token and saving an image on your computer is that an NFT acts as proof of ownership. In this sense, a non-fungible token can be thought of like a receipt showing that the person in possession of it owns the digital asset on which it is based. Saving a JPG on your computer, by contrast, does not give you ownership of the file, let alone allow you to prove ownership of it.
The mechanism behind this proof of ownership relates to the immutability of blockchain storage. Each NFT is unique and must be stored in a wallet at any given time. Neither the underlying data stored on the blockchain nor the transaction history associated with an NFT can be altered, and the blockchain ledger contains a public and transparent record of all transactions. Because of these conditions, each token carries an immutable provenance that can track its complete ownership history from the user who first minted it to the current owner. Possession of the NFT, therefore, demonstrates current ownership of the data on which it is based. It should be noted that this ownership only extends to the copy of the data stored on the blockchain, not necessarily the intellectual property itself.
Because an NFT is a unique digital asset, someone who owns a token can also sell it. A saved image, by contrast, is simply a copy with no provenance behind it. Since images can be copied endlessly from a single source, the copies themselves have no value and can't be sold. NFTs, on the other hand, demonstrate ownership of the underlying file. This proven ownership, rather than the image or file itself, is what really gives an NFT its value.
How NFTs Will Support Future Versions of the Web
Right now, it's understandable that the difference between an NFT and a saved image eludes many people. In the near future, though, NFTs are expected to play a pivotal role in the overall internet landscape. Specifically, they will be crucial to proving digital ownership in the world of Web3, a proposed reimagining of the internet that combines blockchain, cryptocurrency, and metaverse technologies to create a more decentralized web.
In a Web3 environment, for instance, online creators and influencers could mint NFTs to sell to their fans. Drawings allowing fans to win NFTs could also be used to boost engagement, giving tech-savvy creators an edge in building their audiences.
Non-fungible tokens will also allow for the rise of virtual marketplaces in the metaverse. From virtual real estate to items in games, NFTs will enable Web3 users to prove and transfer ownership of goods in the digital world. Clearly, copied JPG files lack these capabilities and would have little value in a Web3 environment.
Going forward, NFTs will become an increasingly important part of the internet world. While some people will continue to make the argument that they're no better than saved JPGs, non-fungible tokens and the proof of ownership they provide have immense potential. Now is your chance to get involved with NFTs at the highest level. With Tokened, you can win the top NFTs. Enter to win NFTs today, and you could be the lucky recipient of a valuable digital asset.