An irreplaceable token (NFT) is a type of cryptographic token on the blockchain that is a unique asset. This can be a fully digital asset or a tokenized version of a real-world asset. Since NFTs are not interchangeable, they can act as proof of authenticity and ownership in the digital world.
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Substitution means that the individual units of an asset are interchangeable and essentially indistinguishable from one another. For example, fiat currency is interchangeable because each unit is interchangeable with other equivalent individual units.
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Few dollar bills can be exchanged for other real dollar bills. This is especially important for assets that are intended to serve as a medium of exchange.
Substitution is a desirable property of currency because it allows free exchange and theoretically there is no way to know the history of each individual unit. However, this is not a useful feature for collections.
What if we could create a digital asset similar to bitcoin, but add a unique identifier for each entity? This will distinguish (i.e., make irreplaceable) each one from all other entities. It's basically NFT.
The biggest use of NFTs today is in the digital content realm. That's because that industry today is broken. Content creators see their profits and earning potential swallowed by platforms.