NFT
An NFT (Non-Fungible Token) is a unique digital asset recorded on a blockchain whose ownership and transaction history are verifiable and cannot be duplicated, distinguishing it from interchangeable (fungible) tokens like Bitcoin or Ethereum.
Fungibility means that one unit of an asset is interchangeable with another unit of the same asset — one dollar is worth exactly the same as another dollar; one Bitcoin is worth exactly the same as any other Bitcoin. Non-fungibility means each token is unique. NFTs use blockchain technology to record a token's unique identifier, metadata, and the full history of who has owned it, creating digital scarcity and provable ownership for the first time in the history of digital assets.
NFTs are most commonly built on the Ethereum blockchain using the ERC-721 token standard, though alternatives such as ERC-1155 (which allows both fungible and non-fungible tokens in a single contract) and NFT standards on Solana and other chains are also widely used. The NFT itself is typically a pointer to metadata stored off-chain (on IPFS or a centralized server) that describes the associated digital file — an image, video, audio clip, game item, or other digital content.
The NFT boom of 2021 saw profile-picture collections like CryptoPunks and Bored Ape Yacht Club trade for prices ranging from tens of thousands to millions of dollars, driven by a combination of speculation, community membership value, and the novelty of verifiable digital ownership. Trading volume on platforms like OpenSea reached billions of dollars per month at the peak.
Beyond digital art and collectibles, NFTs have been applied to event ticketing (to prevent counterfeiting and enable verified resale), gaming (representing in-game items with real-world tradability), music royalties (allowing fans to co-own a share of streaming income), and real-world asset tokenization (representing fractional ownership of physical assets on-chain).
The market for NFTs is highly speculative and illiquid. Most NFT collections have seen their prices decline dramatically from 2021-2022 peaks, and many have become effectively worthless as trading interest evaporated. Buyers carry the risk that the smart contract's metadata link breaks, the platform hosting the art shuts down, or demand collapses. Regulatory classification of NFTs — whether as securities, collectibles, or something else — is still being determined by U.S. authorities.