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What Is a Nonfungible Token?
When something is non-fungible, it is irreplaceable, unduplicable, and cannot be exchanged. Non-fungible tokens, or NFTs, have a distinct digital signature.. Unlike cryptocurrencies and physical money, which are fungible and […]
When something is non-fungible, it is irreplaceable, unduplicable, and cannot be exchanged. Non-fungible tokens, or NFTs, have a distinct digital signature.. Unlike cryptocurrencies and physical money, which are fungible and interchangeable, NFTs are unique. They are considered digital assets and may be present in a variety of formats such as videos, photos, audio files, and beyond. However, some believe that having physical assets represented by digital assets like NFTs also makes it easier to conduct transactions and prevent fraud.
Since NFTs are generally considered one-of-a-kind, some have limited editions that can increase their value in the market to potential buyers and sellers. Creators mint NFTs on blockchain platforms and can include additional information in the metadata for authentication purposes. Additionally, since NFTs can have programmable attributes and can only have one owner at a time, some creators can collect royalties whenever their NFTs are resold to new owners.
Due to their overall popularity, NFTs have many different use cases. Common examples include event tickets, digital collectibles, in-game items, credentialing, royalties, and customer engagement. Although many remain skeptical of their usage, NFTs have ultimately changed how people interact with digital content and likewise, how they perceive digital assets.
Given the implications for ownership and potential value to creators and consumers alike, NFTs and other digital assets must be taken into consideration during the estate planning process. Although NFTs are associated with high volatility within the market, this technology is likely to continue evolving and shaping transactions in the future. Ultimately, NFTs indicate an innovative transition in digital ownership and asset management.
Sources
“Complete guide to NFTs and estate planning.” Trust & Will. https://trustandwill.com/learn/nft
“Non-fungible tokens (NFTs) explained.” AWS. https://aws.amazon.com/blockchain/nfts-explained/
“What are NFTs and how do they work?” Kaspersky. https://usa.kaspersky.com/resource-center/definitions/what-is-an-nft
“What is an NFT? Non-fungible tokens explained.” Forbes Advisor. https://www.forbes.com/advisor/investing/cryptocurrency/nft-non-fungible-token/
