What Is NFT (Non-Fungible Token)?
Also known as: Non-Fungible Token, NFT, Nonfungible Token
In short
An NFT (non-fungible token) is a blockchain-recorded token that has a unique identity, so it cannot be swapped one-for-one with another, and that represents ownership of a digital or physical asset.
With fungible assets such as Bitcoin or a stablecoin, every unit is equal to every other. With NFTs, each token has its own identification number and properties. On Ethereum, NFTs are mostly created with the ERC-721 standard; ERC-1155 allows both fungible and non-fungible tokens in a single contract. Files such as images, music, or video are generally not written on-chain; the token carries a link and metadata pointing to this content.
NFTs are used in areas such as digital art and collectibles, in-game items, domain names, event tickets, and membership rights. Smart contracts can include rules such as paying the artist a royalty on resales, although marketplaces do not always enforce these royalties. After NFTs drew great interest in 2021 and made headlines with high-priced sales, the market went through a serious contraction.
Owning an NFT does not mean owning the copyright to the work; the rights granted vary from project to project. The main risks are the shutdown of the server hosting the content, counterfeit collections, trading volume inflated by wash trading, and low liquidity. Inscriptions created on Bitcoin with Ordinals also offer an NFT-like use.
Last updated: · This content is for information purposes only and is not investment advice.