For the uninitiated, a fungible good is mutually interchangeable. A good example is money, where the value of a $100 bill is equivaalent to other $100 bills (or even two $50 notes). Although there are minute differences such as serial numbers and issue dates, financial authorities deem them fungible because it simplifies everyday life's transactional processes. Conversely, a non-fungible good is unique and cannot be interchanged; some examples include art pieces, land titles, and birth certificates.
One of the most significant issues with non-fungible goods is their ability to prove authenticity. For instance, if someone were to steal the Mona Lisa and sell a fake copy in the market, it would be tough to confirm it is the original, short of bringing in art experts to determine its legitimacy. This is where NFTs come in.
NFTs take advantage of smart contract technology to store and record their unique information on the blockchain – this means that whenever an NFT is created, only one of it verifiably exists. NFT creators can also encode details such as rich metadata or secure file links. Such technological capabilities have enormous implications on how we treat ownership because it allows the transfer of assets safely, efficiently, and verifiably.