NFTs AS THE NEXT STEP IN DIGITAL ECONOMY

Abstract

Non-fungible tokens (NFTs) are a type of digital asset that represents ownership or authenticity proof of a unique item using blockchain technology. Each NFT has a distinct ID, and its ownership and transaction history are recorded using blockchain technology. In other words, NFT is a way for blockchain technology to certify ownership and tradeable rights to digital assets. Unlike cryptocurrency units, they cannot be exchanged like for like. They are unique for each item and, therefore, create a new way of authenticating [1]. Text, picture, video, audio, and game items can all be copied, but the token itself cannot be copied. Tokens are stored cryptographically on a blockchain, which is an immutable ledger that facilitates the process of recording transactions and tracking assets. An immutable ledger is permanent and immune to data corruption, as once the information is recorded, it cannot be altered. These concepts are combined with the benefits of smart contracts. A smart contract is a precondition written into the code on a blockchain. If predetermined conditions are met and verified, computers execute actions like releasing funds to the appropriate parties, issuing tickets, sending notifications, etc. They are commonly used to automatically carry out an agreement, ensuring that all involved parties promptly know the result without the need for an intermediary or delays. The blockchain ledger is subsequently updated upon the culmination of the transaction [2]. NFTs enable the generation and exchange of distinctive digital assets and have the potential to create new economic opportunities and value streams. They have already shown significant potential for generating substantial returns for their holders, thus generating tangible value for both buyers and sellers.