What is a Non-Fungible Token (NFT)?
Non-Fungible Tokens (NFTs) are unique digital items with blockchain-managed ownership. There are many kinds and applications of NFTs—but before we dive into the details, let's learn about a key term: fungibility.
What is fungibility?
If something is fungible, it is easily exchanged with something of equal value. Don't get overwhelmed by the idea of fungibility; it's just the ability of a good or item to be interchanged with other individual goods or items of the same type.A simple comparison of fungible, semi-fungible, and non-fungible items is pictured below.Fungible items like a dollar bill, gold, or even cryptocurrencies like Bitcoin and Ethereum, can be substituted with one another without losing value. They are fungible.
Non-fungibility and
NFTs
If something is non-fungible, it means that it cannot be replaced. It represents something unique in value - and that's what an NFT is!The token part of Non-Fungible Token refers to a digital certificate stored on a publicly verifiable distributed database, also known as a blockchain.The information on this digital certificate, also known as a smart contract, makes each NFT unique. No two NFTs can be swapped, and this makes them non-fungible. Examples of NFTs include digital art, collectibles, virtual reality items, crypto domain names, ownership records for physical items, and more!
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