NFT, Cryptocurrency, and BlockChain in plain human language
This story was initially posted on the GetPaid Community
NFTs is an abbreviation of non-fungible tokens, What does that mean!?
To understand NFT, we must understand the keyword Fungible
It is widely used in fungible law. Something that can be replaced with something else which is identical.
Non-fungible is the opposite of fungible, it is something that is unique, and we cannot find or make a completely identical replica of it.
For example, fingerprints are unique, each person has yours which cannot be the same as someone else’s, so in that sense, we can say fingerprints are non-fungible.
You and I are Non-fungible in the biological sense, the way I am created by the creator is completely different from the way you were created, it is true that we can resemble one person in some areas, but it is not easy to find two people who are 100% alike, so we can say People are also non-fungible
Is my girlfriend fungible to me?
Well she is who she is unless I can find someone exactly the same as her, she is a Non-Fungible human, Not really she is Joan as Joan she has unique character and values she is different from Rehema, They both are non-fungible.
Fungibility refers to the property of an asset whose individual units are interchangeable and essentially indistinguishable from each other. For example, all fiat currencies are fungible. To act as a medium of exchange, each individual unit must be interchangeable with any other equivalent individual unit. A one-dollar bill is interchangeable with any other genuine one-dollar bill.
A ten-dollar bill carries the same value as any other ten-dollar bill, therefore these two can be used as fungible tokens, simply put each can be used in place of the other.
This is a nice definition of fungibility, Something that can be replaced.
Let’s go back to the lesson now, the next word there is Token
According to the Oxford English Dictionary, we find two meanings of the word Token, for an unofficial translation I will put them below:-
- A thing that serves as a visible or tangible representation of a fact, quality, feeling, etc.
“I wanted to give you a small token of my appreciation” - a voucher that can be exchanged for a product or service, usually given as a gift or as part of a promotion. “memory token”
The meaning that goes with the token that we are talking about here is the second one, that the token is a voucher that can be equal in value and either exchanged for something or a certain service.
For example, a voucher for a period of time, a business or driver’s license, a bus or plane ticket, a purchase receipt for certain products, etc.
Now, what is NFT?
The word NFT is an abbreviation of the words Non-Fungible Token, as we have discussed those words above, we can say in general that NFT is a unique token or voucher (it can be made or replaced) to refer to the examples of non-fungible tokens above.
In the language of the queen, it is that “NFTs are tokenized versions of digital or real-world assets. They function as verifiable proof of authenticity and ownership within a blockchain network. NFTs are not interchangeable with each other and introduce scarcity to the digital world.”
We use advanced technology called cryptography to ensure that one token (one NFT) is not identical to another. As in other common systems, for example, the production of mobile vouchers, they ensure that one voucher is not the same as another, so on the surface, this cryptography technology uses very strong calculations to ensure that one NFT is not the same as another.
We use a complex technology called cryptography to make sure that one token does not represent two or more assets.
What is the relationship between NFT and cryptocurrency?
I can say that there is no direct connection between NFT and cryptocurrency, although there is, I am confused :). I will explain.
Before explaining, let me use this opportunity to explain what cryptocurrency is.
Foremost, NFT and cryptocurrency in blockchain technology (I will explain the blockchain a little later), NFT and cryptocurrency need the help of blockchain to prove their validity and always NFT and cryptocurrency are created in a certain blockchain.
The value of cryptocurrency is always economic only (Economic value only) and the value of cryptocurrency is derived from its use (its utility value) as an initial currency, for example, NFT is the value that can be economic or non-economic for example he can create an NFT that represents his original work as a picture and anyone can buy that work using cryptocurrency, but there are other uses of NFT that are not symbolic, there are blockchain technologies that financial institutions, health and other uses of NFT in protecting the validity of certificates and credentials issued by HIV institutions, as well as the year of forging documents.
What is Blockchain?
Have you ever heard the words database? worry not if you have never heard of it I believe you know it or have a clue from using some databases without knowing they were databases or some form of databases, an example of a database is the Excel you use in the office to store various information in short a database is a system that is used to store information in a specific order (this is not a database subject, so I will stop there)
A blockchain is just like a database or excels, except that it has a few unique characteristics,
One of them is that we can only write in a blockchain, and we cannot delete (we can only write in a blockchain but not delete)
In the blockchain, each entry of information is called a block, and each block has its own unique identifier, it also has a reference to another block, that is, in Swahili, each blockchain is made up of blocks and each block is linked to another block. (that’s why we call it blockchain).
Very strict calculations are done (in the context of this thread I will not explain them) which ensures that each block is correct and valid (every block must be verified by the chain it is added to the chain and this process is called mining)
Another characteristic of blockchain is that a blockchain is that the blockchain is not kept in one place only (a blockchain is a decentralized system) there is no central server or single server or a single computer
That the database is distributed across an infinite number of computers
What is the relationship between blockchain and financial systems?
Well, in short, money is information, for example, Banks keep your account information (your name, your account number, and the amount you have) and they also keep the ledger of your account (information about the money you give and deposit) similarly, blockchain is used to keep financial information (ledger) again, blockchain can keep that information more safely than even the databases used by banks (refer to the features of blockchain that I mentioned above)
Blockchain can store the information of money/assets and no one can cheat the system with a well-developed blockchain (although there are incidences of hackers hacking some blockchains it is as difficult as a camel to penetrate the eye of a needle)
Now the application of blockchain due to its characteristics in finance is giving birth to things like cryptocurrency, whose example is Bitcoin
In the language of finance, blockchain is used as a ledger that protects the information of accounts unless it is now in this ledger, someone cannot cheat (or it is very difficult for someone to cheat) and keep false records because when a record is kept, there is complex mathematics that is done to ensure that the record is legit, and it is also necessary All computers that have the blockchain will verify the new transaction/record set The application of blockchain is not only in cryptocurrency (money) but in many areas, for example, the ministry of land can use blockchain to store people’s title deeds and instead of you having that certificate that I can also add, we will give you a token that we can use blockchain to verify its ownership when any if desired
*You can read more here about Blockchain https://academy.binance.com/en/glossary/blockchain
*You can read more here about cryptocurrency https://academy.binance.com/en/articles/what-is-cryptocurrency
*About NFT you can read here https://academy.binance.com/en/glossary/non-fungible-token-nft
