Let’s start with a simple, surface-level overview.

NFTs are digital assets that live on a blockchain. You can also think of them as digital collectibles that can be bought, sold, and traded with others through the blockchain.

For those familiar with collecting physical items such as Pokémon cards, Funko POPs, Beanie Babies, or even postage stamps, the idea of spending money on what might seem like trivial items will make more sense.

But before we talk about where the value of an NFT comes from, let’s address an important question: what makes an NFT a digital asset?

Well, an asset is something that can be owned by an individual. And digital assets already exist in our world, even if we can’t physically touch them. Take, for instance, .mp3 files, eBooks or PDFs, and photographs or images stored as .jpeg files. A digital asset is simply anything that has been created and stored digitally, and has value.

However, the issue with digital assets is how to prove ownership.

Physical artists can leave physical marks on their work to prove that it is original. But how do we do that with our digital creations that we make online in a world where deep fakes and image manipulation are prevalent?

The answer: blockchain and crypto wallets.

There is a misconception that you can just take a screenshot of an NFT and claim that you own it. Think about people on Instagram who post photos of themselves next to a Porsche claiming that it is theirs. Just because it looks like they own it, doesn’t mean they actually do.

The blockchain enables anyone, anywhere to verify whether someone truly owns the digital assets. This can be done through NFT marketplaces like OpenSea or blockchain explorers such as Etherscan.

There are also ways to check the authenticity of NFTs such as a blue checkmark on OpenSea. This indicates that the NFT was part of an original collection.

Note: A blue checkmark does not guarantee that the NFTs are “valuable”. It just signals to people that this is the correct collection versus the copycat collections that try to scam people into buying a copycat NFT. ✅

So, your wallet address verifies your ownership of an NFT on a particular blockchain.

There are currently two blockchains you’ll often hear about when it comes to NFTs: Ethereum and Polygon.