Yahoo Finance's Brad Smith explains NFTs, how they work, and what the benefits of blockchain are.
AKIKO FUJITA: Well, from Tony Hawk's first 900 to John Lennon's clothing, we have heard about all kinds of things being turned into NFTs over the last year. But what exactly is a non-fungible token? And what are they used for in the crypto space? We've got our very own Brad Smith here with the explainer in this week's Yahoo U.
BRAD SMITH: That's right. So, Akiko, basically, breaking it down off to the top here, by now, you've heard of the acronym NFT. And so non-fungible token, basically, it just means that it can't be fungible. One Bitcoin equals another Bitcoin. One NFT, though, that does not equate to the same of another NFT here. So, essentially, it is the token that is a unique digital identifier. It cannot be copied, substituted, or divided. Now one of the advancements that NFTs provide is a true source of authenticity. The existence of the token on the blockchain, it allows for an irrefutable ledger of origin and ownership.
AKIKO FUJITA: So here's the big question-- what are the most practical uses of an NFT? Because it seems like everybody is attaching their name to some form of NFT right now.
BRAD SMITH: Yeah, that's exactly right. And so art, we've seen rare collectibles, memorabilia. They've all become the most immediate use cases for tokenizing assets, even concert tickets or exclusive offerings. Popular art auction houses, such as Christie's and Sotheby's, coming back to the fine arts equation of this. They've launched their own Metaverse targeted divisions that focus on digital art, featuring exclusive NFT blocks further in an effort to attach rare physical products to nonfungible tokens.
Limited edition resale exchanges like StockX, they've minted tokens on the Ethereum blockchain. And then they store the corresponding physical item in a secure facility. The company then allows the owner of the NFT to take possession of the physical item. That would then add a layer of data to that token that the physical item, it was removed from the facility, no longer perceived as factory sealed condition.
So the real estate transactions, that's another space that we've seen NFTs growing in popularity. And then NFTs also can be beneficial in cases of healthcare in the future as patients who tokenize their health attributes and personal data, they would have more insight as to where that data is changing hands versus the current mystery that is right now.
AKIKO FUJITA: I feel like you're going to have to do this one every month, Brad. The growth is so incredible in this space. Thank you so much for the explanation.