What technology underpins NFTs?
Non-Fungible Tokens (NFTs) are built on blockchain technology, which provides a decentralized and secure environment for asset management. The most commonly used blockchain for NFTs is Ethereum, which supports smart contracts—self-executing contracts with the terms of the agreement directly written into code. This enables the creation and transfer of unique digital items that can represent ownership of anything from art to virtual real estate.
Each NFT is a distinct token that is stored on the blockchain, allowing it to be verified as unique. Unlike cryptocurrencies like Bitcoin, which are fungible and can be exchanged on a one-to-one basis, NFTs are non-fungible, meaning each token has individual characteristics that make it unique and valuable.
The use of standards such as ERC-721 and ERC-1155 on Ethereum enables the creation of NFTs, providing a framework for developers to issue and manage these tokens. This ensures interoperability among different platforms and marketplaces, allowing users to buy, sell, or trade their NFTs seamlessly. Overall, blockchain technology is fundamental to the functioning of NFTs, ensuring transparency, ownership, and authenticity.