What are NFTs?

About Non-Fungible Tokens

What is an NFT?

An NFT (Non-Fungible Token) is a representation of a digital asset that is unique and can be traded. 

NFTs prove the authenticity as well as the ownership of assets and goods because the data containing these forms of identification are stored immutably on the blockchain.

In essence an NFT is a medium for sharing Digital Content (similar to that of a CD) except the NFT is registered on a distributed ledger called the blockchain.


Fungible vs. Non-Fungible

Fungible

If an item is fungible, then it can be substituted or exchanged for any similar item. Fiat currencies, like the US dollar, contain fungible units. A one-dollar bill can be exchanged for any other dollar bill. Cryptocurrency tokens like Bitcoin, Ethereum, and MANA are all fungible because one token can be exchanged for any other token of the same currency. The only thing that changes is a record on the blockchain registering the transaction.

Many Fungible Tokens are minted to an Ethereum Standard called ERC20.

Non-Fungible

A non-fungible asset, therefore, has the opposite characteristics to this definition: they are unique, irreplaceable, and non-interchangeable. One physical example of a non-fungible asset could be a plane ticket. While they look the same as other tickets, each one has different passenger names, destinations, departure times, and seat numbers.
Many Non-Fungible Tokens are minted to an Ethereum Standard called ERC721 and ERC1155.