Non-Fungible Token (NFT)

Fungible assets are interchangeable: one unit of a currency is the same as any other. Non-fungible tokens are each unique, with their own identity recorded on the blockchain, which makes them suitable for representing one-of-a-kind items.

NFTs became widely known in 2021, when some digital artworks and collectibles sold for millions of dollars. They are used for digital art, trading cards, items in video games, event tickets and memberships.

For example, an artist might sell a digital artwork as an NFT, with a smart contract that automatically pays the artist a royalty each time the NFT is resold, although such royalties are not always enforced by marketplaces.

Owning an NFT usually means owning the token, not necessarily the copyright or the underlying file, which may be stored elsewhere. The NFT market has been highly volatile, with prices for many collections falling sharply after the 2021 boom. Concerns include fraud, market manipulation, unclear legal rights and the environmental impact of some blockchains.