How is NFT Ownership Tracked?
NFT ownership is primarily tracked using blockchain technology, which provides a decentralized and secure ledger for recording transactions. Each NFT is associated with a unique identifier, stored in a smart contract on the blockchain. This contract contains metadata about the NFT, such as its creator, ownership history, and transaction details.
When an NFT is created (or minted), its details are recorded on the blockchain. This includes the owner’s wallet address, ensuring transparency and traceability. Each time the NFT is sold or transferred, the transaction is recorded as a new entry on the blockchain, updating the ownership status without the need for intermediaries.
The use of cryptographic hashing in blockchain ensures that the records are immutable. Once an NFT's ownership is updated, it cannot be altered or deleted, providing a permanent and verifiable proof of ownership. This is crucial in establishing authenticity and preventing fraud in the digital art and collectibles market.
Furthermore, marketplaces that facilitate NFT sales often leverage this blockchain data to display ownership details, sales history, and provenance, allowing buyers and sellers to engage with confidence in the value and legitimacy of the NFTs they are dealing with.