David Schwartz, CTO of Ripple, recently sat down with our in-house teams to discuss what is currently the most famous blockchain technology in the world, non-fungible tokens (NFT).
But what exactly are NFTs?
Fungible tokens vs. non-fungible tokens
First of all, let’s look at what it means for something to be fungible. Something is fungible when it is identical to all other valuables around it. In other words: “Similar can be replaced by similar”.
Non-fungible tokens, on the other hand, are unique to the market and have their own value. Unlike fungible tokens, they are generally not divisible as it is difficult to understand what a fraction of any of them would mean.
For example, an NFT can represent a physical work of art. How about this work of art divisible because if you don’t have all three thirds of this work of art, you really don’t have it.
Are NFTs a Trend?
David stated that it’s too early to determine if non-fungible tokens are a fad, but NFTs have the potential to change the way we exchange ownership and rights to certain information.
The current crop of NFTs seems to exploit people’s desire to own something that other people cannot own, but the fact that they are transferable has an element of potential gain for artists, musicians, creators, and those familiar with secondary Want to make money Make money Sales.
In addition, there is a real opportunity here for long-term benefits. NFTs could become a way of owning digital rights to items such as computer games, songs, films, and the like.
The 5 layers of NFTs
As David shared, successful NFTs aren’t just something that every blockchain supports. There is a whole ecosystem with five key levels:
- Infrastructure – where the non-fungible tokens are kept
- Embossing – the process that enables people to easily create NFTs
- Publication and storage – where the content to which an NFT is entitled is published and stored
- Custody – the wallet, browser, or viewer that allows people to show their NFTs to others
- Marketplace and Exchange – where NFTs can be purchased and where creators can potentially buy secondary market residuals
As our CTO announced, non-fungible tokens won’t be going anywhere anytime soon. With its potential to transform the way people store and share valuables, either physically or digitally, it is important that we effectively pave the way for the future.
What ideas do you have for creating an exciting and smooth user experience in the custody and marketplace layers of the NFT ecosystem?
The RippleX team is working on developing new technologies to enable use cases like NFTs and more. If you’re a developer interested in building on the XRP ledger, learn more today.