Like all other components of the Web3 ecosystem, non-fungible tokens are powered by the blockchain. Web3 features products with various functionalities, however, at the base of it all is blockchain technology. It's like the Web3 space is a field with different types of trees, but they're planted on the same soil; the blockchain. To make sense of how blockchain technology works in tandem with NFTs it's best to look at both concepts individually. We'll start with NFTs.

Understanding NFTs

The word NFT stands for non-fungible token. Fungibility means that an item can be replaced with another of equal value. You can swap one dollar for another dollar because they're worth the same thing

Fungible assets are easy to replace or exchange because their value is completely separate from their uniqueness. It is the opposite with non-fungible items. The basis of their value is their uniqueness, with NFTs each token is a distinctive product and because of this, their worth differs.

Non-fungible tokens are unique, digital assets that exist on the blockchain. They are one-of-a-kind tokens that represent specific items whether they exist physically or on the digital plane. Digital artworks have been the face of the NFT space for a while but they have also been used to represent physical pieces of art as well as music, videos, luxury goods, and even real estate

Blockchain Technology

In basic terms, blockchain technology is essentially a super secure method of recording information. A blockchain is like a massive ledger spread across thousands of computers known as nodes that are part of a single network. You can compare it to a Google spreadsheet that a group of friends share. Let’s say they use it to keep track of everything they buy, that is how much money they spend. Everyone has access to it on their computers or phones so they can add their data and view others, but once they’ve imputed a record, it can’t be altered.

A blockchain is something like this. Rather than a single shared spreadsheet, it’s as though there are many copies of it stored on different computers. They all have the same information and being in the same network, they’re constantly in communication to make sure every copy is updated. This method ensures that even if one computer is hacked, all the others are still secure and none of the data is compromised.

Transactions join the blockchain in blocks, each block contains the details of a set of transactions, and all the blocks are linked to form, you guessed it, a chain of blocks. Computers that participate in the blockchain work to verify and record transactions. Depending on the blockchain network these nodes use a certain method to confirm that transactions are legitimate before adding them to the blockchain.

How NFTs and Blockchain Technology Collide

Ownership in the digital space would be a pipedream without NFTs. When multiple copies of a digital file can exist, trying to claim ownership of one and assigning value to it is futile. But NFTs make digital ownership possible and blockchain contributes in the following ways;

1. Security

Security is a paramount concern in the digital realm and this translates to the world of NFTs. Virtual items are easy to replicate, alter or even steal. However, thanks to the tamper-proof nature of the blockchain, some random person couldn’t just waltz in and alter an NFT or make a fake one. Each transaction relating to an NFT from its creation to its most recent sale is recorded on the blockchain so it is visible to anyone. This level of security instills trust in NFTs, protecting both creators and buyers.

1. Transparency

Blockchain technology brings transparency to the NFT market. It can be hard to confirm the authenticity and ownership of an asset especially in the virtual plane. However, the blockchain is an open, transparent ledger that contains all necessary records. Anyone can trace the journey of an NFT by simply looking it up on the blockchain.

Potential buyers and collectors can verify the legitimacy of an NFT by examining its transaction history on the blockchain erasing concerns about authenticity, fraud, forgery, or plagiarism. They can confidently determine if the asset is genuine, ensuring that they are making informed and secure transactions. For creators, this transparency offers a level playing field. Artists can prove the authenticity of their digital creations, protecting their work from unauthorized reproductions or claims of ownership by others.

1. Decentralization

The decentralization of the blockchain is a fundamental aspect of NFTs. Traditionally, centralized platforms and intermediaries have controlled the distribution and trading of digital assets. The result of this includes high fees, restrictions, and limitations for creators and buyers. With blockchain technology, however, NFTs can be traded directly between participants without the need for intermediaries, eliminating gatekeepers and reducing costs. Decentralization empowers creators and collectors, giving them greater control over their assets, pricing, and licensing terms.

Final Thoughts

Without the blockchain, the entire basis of the NFT space would be lacking. Blockchain technology forms the foundation for everything that defines non-fungible tokens. As we venture further into the future, we can expect to see NFTs open more doors to a world where digital uniqueness thrives under the watchful eye of the blockchain.

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