What is a Blockchain?
A blockchain is nothing more than a database. A fairly basic one in fact, as it essentially consists of only one table, containing transfers (or creations/destructions) of digital records like crypocurrency or NFTs. Before moving onto what these are however, it is vital to mention the two important properties of blockchains that set them apart from traditional databases:
One (1) is that they are databases you can only add to - chain - and the other one (2) is that only those sets of records - blocks - can be added that other people agree should be added (other people being those you don't know and can't influence - if the blockchain is decentralised).
Contrary to what some US federal agencies would like to believe, they are different (and more precisely, innovative) to already regulated entities, in that a blockchain is a database with pre-audited records. This is a big deal. You no longer need "auditors to audit the auditors," who's job it is to make sure that the records have not been tampered with. There is nothing to make sure of, because if a record enters the database, it means that it must have been been audited, and hence, it will not be compromising the integrity of the database, i.e. the blockchain.
That’s that. There are various blockchains like Bitcoin, Ethereum, but arguably one of the cheapest, fastest, and more energy efficient is the XRP Ledger, and at its centre, its native cryptocurrency XRP.
What is a Cryptocurrency?
A cryptocurrency is a quantity (1, 4, 0.2 etc) associated with an address on the blockchain. As the blockchain is just a set of transactions, the total debit/credit of all the transactions for any account will yield “how much cryptocurrency the account has” i.e. the crypto balance.
What gives this balance value? The same thing that gives anything value, it is desired due to being useful in a number of essential human activities like moving money around in a world of hundreds of currencies or registering an entry on a public, immutable blockchain to provide proof of ownership of just about anything.
In the case of the XRPL, its use as a bridge currency in fiat – fiat transactions has been extensive, and this blockchain has the potential to yield immense savings and improvements in customer experience, for those impacted by international money transfers. From November 2022 however, the XRPL is now capable to house NFTs.
What is an NFT?
Instead of transactions that move XRP, you can also transact in “assets” other than XRP. These are called “tokens” and can behave similarly to the native currency XRP but differ in ways to suit their application. For example, transactions can record an account’s ownership of an address on a computer network that’s “always on”. Such system is the IPFS or “InterPlanetary File System”, a way to share the storage of files (text, images) between members of the network, in a way that the file is available as long as at least one member advocates for the existence of the said files, referenced by a CID (content identifier).
In practice, an NFT is recorded in the following way. In the XRPL, there are transactions that create (or transfer) a URI (Unique Resource Indicator) or a location of a text file on the IPFS.
In the example above, it is (after converting from hexadecimal format) cid:QmZ7oho5hasT1M9H4ogAxZxaYebvNRx4hnELqFd3B2gXKo. Inputting the cid into a an IPFS webaddress (https://ipfs.io/ipfs/QmZ7oho5hasT1M9H4ogAxZxaYebvNRx4hnELqFd3B2gXKo), we can see the file as follows:
This is the NFT’s Metadata, including name, description, issuer and – importantly – image content, indicated as ipfs:// QmVLgEdmQsnH9qDRHqR1CMwcmEs8FvDEac6KC6WVZFXjTW, a link pointing to the IPFS system.
Inputting this link into our gateway (https://ipfs.io/ipfs/QmVLgEdmQsnH9qDRHqR1CMwcmEs8FvDEac6KC6WVZFXjTW) will show the image on the system.
It is important to mention that IPFS maintenance (by ensuring that a pin exists on the Metadata and the image file) is something the owners have to ensure themselves, but it is not difficult, as some services (Filebase, Pinata) offer ongoing pinning for free, though savvy users can set up their own IPFS node if they so wish.
After good IPFS maintenance however, the NFT you are recorded holding on the XRPL will forever be yours, unless you choose otherwise.