What is NFT?

Non-fungible means that two units of the asset are not equivalent or interchangeable — each NFT has unique metadata that distinguishes it from every other token. This contrasts with fungible assets such as bitcoin or dollars, where one unit is equivalent to any other unit of the same denomination.

NFTs are created (minted) through smart contracts on a blockchain. The contract specifies the token’s unique identifier, metadata (often a pointer to an image, video, or file), and the history of its ownership. Ethereum is the most widely used blockchain for NFTs, with standards such as ERC-721 and ERC-1155 defining how they function.

Common NFT use cases:

• Digital art and collectibles: Artists mint and sell unique or limited-edition digital works, with smart contracts optionally encoding royalties payable to the creator on secondary sales.
• Gaming items: In-game assets such as characters, weapons, or land parcels represented as NFTs that can be owned and traded outside the game’s platform.
• Event tickets: NFT-based tickets that can be verified on-chain and transferred between parties without a central ticketing authority.
• Domain names: Blockchain-based domain names that resolve to crypto wallet addresses.

A critical distinction: owning an NFT typically means owning a blockchain record establishing that ownership. The underlying file — the image or video — is usually stored off-chain. If that storage location becomes unavailable, the NFT’s associated content may no longer be accessible even if the token record persists.

NFT markets experienced dramatic volume spikes in 2021–2022 followed by steep declines. The long-term utility of NFTs as a technology category remains a subject of active debate.