Stands for "Non-Fungible Token." An NFT is a digital asset, such as an image or video that someone can purchase. "Non-fungible" means the asset is not replaceable or redistributable. Unlike a stock photo (or video), which multiple people can buy, only one person can own an NFT.
Common NFTs include digital photos, artwork, animations, and collectible sports cards. Anyone can create an NFT, but most are produced and sold by celebrities or known artists. When you buy an NFT, you receive official ownership rights to the asset.
While digital media can be easily copied, the value of an NFT is its ownership rights. NFT licenses are stored in a blockchain, similar to a Bitcoin transaction record. When someone purchases an NFT, the transaction is recorded in the blockchain, and that person acquires exclusive rights to the asset.
Are NFTs Unique?
Each NFT is unique, but creators may offer multiple "editions" of an NFT. For example, an artist may sell five editions of the same digital painting, which five different people can purchase. A sports figure may offer several hundred or even several thousand editions of a digital sports card. Generally, the more editions, the less value each NFT has.
Non-fungible tokens spiked in popularity in 2021, with many celebrities and artists jumping on the bandwagon. While some NFTs have sold for several million dollars, the long-term value of NFTs remains to be seen.