{"id":11006,"date":"2023-01-23T16:06:26","date_gmt":"2023-01-23T10:36:26","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=11006"},"modified":"2023-07-27T23:32:25","modified_gmt":"2023-07-27T18:02:25","slug":"nft","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/business-banking\/nft\/","title":{"rendered":"What is NFT (Non-Fungible Token) and How It Works"},"content":{"rendered":"<p>Remember <a href=\"https:\/\/media.smallbiztrends.com\/2022\/02\/best-selling-nfts-this-week.png\" rel=\"nofollow noopener\" target=\"_blank\">this<\/a> image? This illustration of a monkey is one of the most famous NFTs ever. If you&#8217;re confused about what an NFT is, you&#8217;re at the right place. Let&#8217;s unwrap the confusing world of NFTs once and for all.<\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e2a22891db5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e2a22891db5\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#What_is_NFT\" >What is NFT?\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#What_is_Fungibility\" >What is Fungibility?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#What_is_Blockchain\" >What is Blockchain<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#How_NFT_Works\" >How NFT Works<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Examples_of_NFTs\" >Examples of NFTs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Art\" >Art<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Film\" >Film<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Memes\" >Memes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Real_Estate\" >Real Estate\u00a0<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Future_of_NFTs\" >Future of NFTs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#FAQs\" >FAQs<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#What_is_an_NFT\" >What is an NFT?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#Why_do_people_buy_NFT\" >Why do people buy NFT?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#How_does_an_NFT_make_money\" >How does an NFT make money?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/razorpay.com\/blog\/business-banking\/nft\/#How_can_I_buy_an_NFT\" >How can I buy an NFT?<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What_is_NFT\"><\/span><b>What is NFT?\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">NFTs, which stands for Non-Fungible Tokens, are unique, digital assets stored on a blockchain. This blockchain technology is also used in cryptocurrencies like Bitcoin.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">NFTs are generally in the form of artwork, music, photos or videos and can be bought and sold online. <\/span><span style=\"font-weight: 400;\">They have become more popular in recent years, with popularity on social media and the internet.\u00a0<\/span><\/p>\n<p>The most important feature of an NFT is that it is <strong>non-fungible<\/strong>. Fungibility is the property of an asset or commodity that allows it to be indistinguishable from others of the same kind and value. Let&#8217;s understand fungibility a little better.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Fungibility\"><\/span><b>What is Fungibility?<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">\u201cFungibility\u201d means that something can be exchanged for another thing of the same value. A ten-rupee note, for example, can be exchanged for another ten-rupee note. A dollar will always be equal to another dollar. Cryptocurrencies and money are always fungible.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Non-fungibility, therefore, means that an item is so unique that it cannot be exchanged for any other item. The Mona Lisa painting, for example, cannot be exchanged for any other painting, or even an exact replica of itself.\u00a0<\/span><\/p>\n<p>NFTs, or non-fungible tokens are unique, like works of art, and therefore non-fungible. You cannot exchange one NFT for another because both their values are different.<\/p>\n<p>The second most important feature of an NFT is that it is stored on a blockchain. Here&#8217;s a breakdown of how blockchain works.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Blockchain\"><\/span><b>What is Blockchain<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-13324 aligncenter\" src=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/blog-content\/uploads\/2023\/01\/1600X900-How-does-blockchain-work.jpg\" alt=\"what is blockchain\" width=\"960\" height=\"540\" srcset=\"https:\/\/blog.razorpay.in\/wp-content\/uploads\/2023\/01\/1600X900-How-does-blockchain-work.jpg 960w, https:\/\/blog.razorpay.in\/wp-content\/uploads\/2023\/01\/1600X900-How-does-blockchain-work-300x169.jpg 300w, https:\/\/blog.razorpay.in\/wp-content\/uploads\/2023\/01\/1600X900-How-does-blockchain-work-768x432.jpg 768w\" sizes=\"auto, (max-width: 960px) 100vw, 960px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Blockchain is a technology where information can be stored digitally as completely anonymous, untraceable blocks.\u00a0<\/span><span style=\"font-weight: 400;\">It is a digital record of transactions, with each record containing information about the next.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This chain is constantly updated and secured with cryptography, making it virtually impossible to tamper with. The distributed nature of blockchain also makes it secure, as it is not stored in one place, but rather on multiple computers all over the world.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It is used to store cryptocurrencies like Bitcoin and Ethereum. The same technology is also used to store and transfer ownership of NFTs.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_NFT_Works\"><\/span><b>How NFT Works<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">People who want to buy or sell NFTs do so on online marketplaces like <a href=\"https:\/\/opensea.io\" rel=\"nofollow noopener\" target=\"_blank\">OpenSea<\/a>, <a href=\"https:\/\/rarible.com\/\" rel=\"nofollow noopener\" target=\"_blank\">Rarible<\/a>, and SuperRare.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Once buyers identify something they like, they purchase it with cryptocurrencies like Ethereum, which are stored in digital wallets.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The creation of a new NFT is called \u201cminting\u201d.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Today, non-fungible tokens are mostly used as status symbols or collectables \u2013 most we hear about in the media are artwork or audio that people buy the same way that people buy paintings to display in their homes.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But NFTs also have a number of other uses. Since they are stored entirely online, the chances of theft or forgery are almost zero. It also helps enable market efficiency and establishes a direct link between creator and consumer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">NFTs can represent <\/span><i><span style=\"font-weight: 400;\">any <\/span><\/i><span style=\"font-weight: 400;\">asset, as long as it can be digitized. Real-life assets like real estate and clothes can be sold digitally \u2013 Nike\u2019s system CryptoKicks is used to verify the authenticity of sneakers that people buy in real life.<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Examples_of_NFTs\"><\/span><b>Examples of NFTs<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Art\"><\/span><b>Art<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">The most common examples of NFTs are artwork. There are many popular artworks: Bored Apes, EtherRocks, and Everyday: the First 5000 Days.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Film\"><\/span><b>Film<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">NFTs have also been used a medium to sell actual films as well as movie tickets. A few limited-edition tickets to Deadpool 2 were sold before the movie was released as part of promotions. Quentin Tarantino, director of Pulp Fiction sold uncut scenes from the movie as seven NFTs.\u00a0\u00a0\u00a0<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Memes\"><\/span><b>Memes<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">A number of popular memes like Nyan Cat and Doge have been sold as NFTs, as a way for the creator of the meme to assert ownership and earn royalties.<\/span><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Real_Estate\"><\/span><b>Real Estate\u00a0<\/b><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\">Recently, real estate both online and in the physical world are being sold as NFTs \u2013 people can purchase pieces of land and assert ownership via digital smart contracts. There are entire worlds, called metaverses being sold digitally!\u00a0<\/span><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Future_of_NFTs\"><\/span><b>Future of NFTs<\/b><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><span style=\"font-weight: 400;\">While NFTs are today only being used as status symbols or for entertainment purposes, there is a lot of future potential.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Digitization is quickly becoming the need of the hour, with things that were once confined to the real world being digitized.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A good example of this digitization is banking. Banking has traditionally been done out of physical bank branches \u2013 which include long, tedious processes and paperwork.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With the advancement of technology, banking and finance has also been digitized. Today, leading the forefront of innovation for banking are neobanks like RazorpayX.<\/span><\/p>\n<div style=\"text-align: center;\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/x\/current-accounts\/?r=blog_cta_business_banking_nft&amp;utm_source=blog&amp;utm_medium=cta\" target=\"_blank\" rel=\"noopener\" data-schema-attribute=\"\">Explore RazorpayX<\/a><\/div>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div id=\"rank-math-rich-snippet-wrapper\"><div id=\"rank-math-faq\" class=\"rank-math-block\">\n<div class=\"rank-math-list \">\n<div id=\"faq-1\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"What_is_an_NFT\"><\/span>What is an NFT? <span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>NFTs, or non-fungible tokens are unique identifiers that are stored on a blockchain. They are generally in the form of artwork, music, photos or videos and can be bought and sold. <\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-2\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"Why_do_people_buy_NFT\"><\/span>Why do people buy NFT?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>NFTs today are mostly used as status symbols or collectibles \u2013 most NFTs we hear about in the media are artwork or audios that people buy the same way that people buy paintings to display in their homes. <\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-3\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"How_does_an_NFT_make_money\"><\/span>How does an NFT make money?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>NFTs are sold by their creators online. Assets like paintings, music and movies that can be digitized are sold on NFT marketplaces like OpenSea and Rarible.<\/p>\n\n<\/div>\n<\/div>\n<div id=\"faq-4\" class=\"rank-math-list-item\">\n<h3 class=\"rank-math-question \"><span class=\"ez-toc-section\" id=\"How_can_I_buy_an_NFT\"><\/span>How can I buy an NFT?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"rank-math-answer \">\n\n<p>People who want to buy or sell NFTs do so on online marketplaces like OpenSea, Rarible, and SuperRare. Once buyers identify an NFT they like, they purchase it with cryptocurrencies like Ethereum, which are stored in digital wallets. <\/p>\n\n<\/div>\n<\/div>\n<\/div>\n<\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Remember this image? This illustration of a monkey is one of the most famous NFTs ever. If you&#8217;re confused about what an NFT is, you&#8217;re at the right place. Let&#8217;s unwrap the confusing world of NFTs once and for all. What is NFT?\u00a0 NFTs, which stands for Non-Fungible Tokens, are unique, digital assets stored on<\/p>\n","protected":false},"author":106,"featured_media":11501,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[27],"tags":[415],"class_list":{"0":"post-11006","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business-banking","8":"tag-nft"},"_links":{"self":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/11006","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/users\/106"}],"replies":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/comments?post=11006"}],"version-history":[{"count":0,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/posts\/11006\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media\/11501"}],"wp:attachment":[{"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/media?parent=11006"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/categories?post=11006"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/razorpay.com\/blog\/wp-json\/wp\/v2\/tags?post=11006"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}