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What is Web3?
The Internet, as we know it today, is what some call Web 2.0.
With cryptocurrencies and non-fungible tokens (NFTs), we are on the verge of a new jump in paradigm.
NFTs are a way to represent ownership of a digital good. The digital good could be an image, video, or any form of digital data.
Since the rise of the Internet, there has not been a way to claim possession of a digital good (Web 2.0). This issue is compounded since most files can be infinitely copied, pasted, and shared.
These are unique tokens that can be used to certify the authenticity and ownership of a piece of digital media.
Like cryptocurrencies, NFTs are issued on a blockchain.
NFTs are also used to designate ownership of a specific asset. Each NFT is tied to some unique data. This data is typically a digital file of some kind (or reference thereto) and governed by a “smart contract.”
The process of converting a media file into a non-fungible token is referred to as “minting” an NFT. Just like with cryptocurrency, the NFT is written to the applicable blockchain database during the minting process.
Unlike cryptocurrency, NFTs are mostly not fungible, meaning each NFT is unique and not interchangeable with another NFT.
While one bitcoin is equivalent to another bitcoin, no two NFTs are the same.
Because NFTs are new, there is limited information on how existing laws and regulations apply to NFTs. Despite these uncertainties, NFTs are an interesting accelerator for the Web3 economy.
For the first time, content on the internet in the form of an NFT can be definitively owned by a specific person independent of a centralised system.