NFT stands for Non-fungible token.
Think of an NFT as a digital stamp of ownership used to confirm the authenticity of a unique item. At the moment that stamp is recorded (tokenized) on a secure public database (blockchain), the stamp becomes verified as one of a kind and cannot be modified or copied.
An item is fungible if it can easily be exchanged or substituted and maintain its same value. A dollar bill is an example of a fungible item because it can be replaced or exchanged for 4 quarters (or another one dollar bill) and still retain the same exact value. Other fungible items include:
- Bitcoin or other crypto currencies
- Casino chips
An item is non-fungible if it cannot be substituted because it has unique qualities that make it different from other similar items. While many NFTs are digital, they can be used to verify the authenticity of real-world items too. Examples include:
- Event tickets
- Collectibles like trading cards
- Digital art
- Virtual items like video game skins and avatars
- Tangible assets like real estate, cars, and even clothing
It is that publicly verifiable ownership that makes NFTs valuable because it allows them to be easily and securely traded or sold and allows for a variety of additional uses like:
- Unlock owner benefits like exclusive access to an event or an experience
- Artist/creator royalties
- Chain of custody verification, eliminating ticketing fraud