What Are Non-Fungible Tokens and How Do They Work?

If you have not been paying attention to digital currencies such as the Ghost token, which trades under the symbol GHST, you need to learn about the ongoing trend of non-fungible tokens. The value of this type of token will fluctuate according to more than just market conditions, but not because of an immediate spike in supply; instead, you have to pay greater attention to market capitalization.

Before we get around to explaining non-fungible tokens such as GHST, let's consider what Charlie Lee, founder of the Litecoin network, recently said about this kind of digital currency: It has generated enough hype to be compared to the initial coin offering (ICO) craze that swept over the markets a few years ago.

NFTs do not directly represent currency tokens; when you look at Bitcoin and stable coins such as USDC, they are fungible because you can use them to pay for goods or services, thus placing them into circulation. In the case of NFTs, they are digital assets, but their function is to represent something other than currency value. They run on blockchain networks, but they may be used to represent fractional values of real estate properties, for example. Interestingly enough, NFTs are not meant to be exchanged, but they still play a role in the cryptocurrency markets.

As previously mentioned, NFTs are subject to their own market capitalization, and in the case of GHST, it has been rising. The exchange price of GHST climbed from $0.61 in late January to more than a dollar in late February. The excitement surrounding this NFT can be explained by the moves that its development team has been making this year. Starting on March 2, GHST will trade on a new and improved blockchain network, and this will in turn make it a more attractive token for developers.

Thus far, GHST and competing NFTs have been used to represent the value of digital collectibles, but they are attracting the attention of individuals who are into tangible collectibles such as baseball cards and tennis shoes. The next order of business for NFT developers is to keep transaction fees as low as possible in order to make the use of these tokens more enticing.