Definition
An NFT, or non-fungible token, is a type of crypto asset that is individually distinct and cannot be exchanged on a one-to-one basis with another token. Each NFT carries unique identifying data recorded on a blockchain, which makes it suitable for representing specific items such as digital art, collectibles, in-game items, or other unique assets.
Unlike fungible tokens, where every unit is interchangeable with another, NFTs are designed so that each token can be distinguished and valued separately. Their uniqueness and ownership history are secured by the underlying blockchain, allowing NFTs to serve as a verifiable record of provenance and authenticity.
NFTs are often associated with a marketplace environment, where they are listed, bought, and sold using cryptocurrency. In these settings, the NFT functions as a digital certificate that points to or encodes information about the asset it represents, while the blockchain maintains a transparent ledger of transfers and current ownership.
In Simple Terms
An NFT is like a one-of-a-kind digital token that proves who owns a particular digital item. Instead of many identical copies of the same token, each NFT is different and can be traced back to its creator and past owners on a blockchain.
People often use NFTs for things such as artwork, music, videos, or game items, where it matters which specific item is being owned. NFT trading usually happens on a marketplace, where these tokens are displayed, priced, and exchanged, while the blockchain keeps track of which account currently holds each NFT.