In the previous lesson, you learned what an NFT is
That NFTs, by definition, are NOT identical nor interchangeable with anything else.
In other words, one of the defining characteristics of NFTs is that they are unique.
What do I mean by unique?
For example, there is only one Mona Lisa.
There may be several replicas and forgeries of the Mona Lisa, but only one was painted by Leonardo himself in the 1500s.
And by Leonardo, I’m talking about the Italian polymath, not the ninja turtle. 😂
You can also take photos of the Mona Lisa or frame a high-res print to display in your living room, but that’d be nowhere close to the monetary value given to the authentic original version.
The real Mona Lisa is *probably* displayed in a huge gallery in the Louvre… or hermetically sealed in a secure underground vault. We may never know for sure.
Just like Mona Lisa is one of a kind, so is an NFT.
When it comes to famous art masterpieces, ownership and authenticity are verified through professional appraisers who issue certificates to guarantee that it is the one and only true original.
With NFTs, keeping track of who owns what is made much more secure through the use of blockchain technology. Whoever holds the private keys to the address where an NFT is assigned on a blockchain has digital ownership and full control of the asset.
This means that whoever owns the NFT solely has the ability to sell it or give it away. If you have an NFT that you’ve decided to keep for yourself, you own it forever!
Not familiar with private keys and addresses? Read our lesson on crypto wallets.
Even after you pass away, no one can just take the NFT for themselves like real-world assets, unless you’ve given them some kind of access to your digital wallet.
An NFT is a package that is made up of two key components: the token itself and the digital content. This digital content takes the form of a file, like a text file, image file, audio file, video file, etc. This file is known as the “metadata” While the token itself is stored “on-chain” or directly on a blockchain, the metadata is usually NOT stored on the blockchain, also known as being stored “off-chain“.
Because an NFT is technically a piece of code on a blockchain, it can be programmed to have various built-in features.
One example is that royalties can be programmed on the tokens, which means that an artist can still monetize secondary sales of their work.
And depending on the blockchain the NFT is built on, it is also permissionless. This means that third-party features can be built on the NFT, allowing it to be used in multiple ways, even more than what the original creators intended.