What is NFT and Why Should You Care?

New financial instruments are constantly being created, and it can be difficult to keep track of them all. However, that’s exactly why you should care about the burgeoning world of non-fungible tokens. These are essentially digital currencies with unique and identifiable characteristics that distinguish them from one another. If you’re interested in the future of cryptocurrency and the role non-fungible tokens will play, keep reading.

What Is a Non-Fungible Token?

Simply put, a non-fungible token is a representation of a unique asset or commodity with characteristics that make it unidentifiable. You might own a token that represents a particular virtual cat, or an unique piece of real estate. In cryptocurrency terms, these assets are called “collections”, and they’re the future of the digital asset economy.

Why Should You Care About NFTs?

Think about it this way: the world’s financial systems are built around the concept of fungibility. You can literally take any currency in existence and trade it for another with no questions asked. Why? Because each currency is deemed “fungible”.

The worry is that some assets are not fungible. If you own an unique painting by Mona Lisa, it might not be possible toTrade it for an identical painting. Instead, you might have to sell it in parts, or negotiate a transaction with the assistance of a third party.

How NFTs Work With Cryptocurrencies

NFTs are becoming increasingly important as a way for cryptocurrencies to bridge the gap between fiat and virtual assets. At its core, a cryptocurrency is meant to be a digital currency that’s decentralized, with no central authority managing the money. However, that doesn’t mean the technology can’t be used to store non-fungible assets.

The first use case for non-fungible tokens in cryptocurrency was asset-backed blockchain tokens. For example, suppose you create a token called “Stock” that represents a portion of a company’s equity. You could create Stock tokens that represent a portion of Apple, Facebook, Google, or any other type of company you’d like.

When someone wants to transfer ownership of the Stock tokens, they’d need to transfer the underlying assets as well. The Stock tokens would be a representation of those assets, and could be transferred on the Ethereum blockchain just like any other ERC-20 token.

Key Takeaway

Most cryptocurrencies today are built to be used as digital money. However, that doesn’t mean you can’t store non-fungible assets on a blockchain. Asset-backed blockchain tokens are an easy way to represent unique physical assets as tokens on a blockchain, making them easy to trade and manage.

Beyond asset-backed tokens, non-fungible tokens are a new and emerging technology in the cryptocurrency world. Their role is still being defined, but it’s safe to say that non-fungible tokens have a bright future in the world of cryptocurrencies.

What is Qube?

Qube is a multipurpose crypto community that provides a variety of decentralized financial (DeFi) services, as well as a cryptocurrency platform for creating and trading non-fungible tokens (NFT) and other useful features.

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