Glossary · Crypto
NFT
An NFT (non-fungible token) is a one-of-a-kind token on a blockchain that records who owns a specific item, such as a digital picture or a ticket.
Also called: non-fungible token, crypto art, digital collectible
In plain words
A dollar bill is fungible: any dollar can replace any other. A concert ticket for seat 14B is not: it is that seat, at that show. An NFT, a non-fungible token, is a blockchain record of the second kind: a token with its own number, owned by one address at a time.
The token is a small entry in a smart contract, “item #1234 belongs to address 0x…”, plus a link to a description and usually an image. Selling it moves the entry to the buyer’s address, in public, with no gallery or ticket office in between.
NFTs boomed in 2021, when collections of cartoon apes and pixel punks sold for hundreds of thousands of dollars apiece and a digital collage by the artist Beeple fetched $69.3 million at Christie’s. Trading then shrank sharply in 2022 and 2023.
Example
What you actually own when you buy an NFT
- You pay 0.5 ETH (about $1,025 at the latest price) for token #1234 of a collection. The contract now lists your address as its owner.
- The picture itself is usually not on the blockchain: the token holds a link to a file stored elsewhere, on a web server or a file-sharing network such as IPFS.
- Unless the terms say otherwise, the copyright stays with the creator: you own the token, not the right to print it on T-shirts.
- Many collections ask for a royalty, say 5%, to the creator each time the token is resold, though some marketplaces have made royalties optional.
An NFT proves who owns a token; what the token is worth depends entirely on what someone else will pay for it.
One level deeper
Most NFTs follow a standard called ERC-721 on Ethereum, finalized in 2018; one of its authors had built CryptoKitties, a 2017 game of collectible digital cats so popular that it clogged the network. CryptoPunks, 10,000 pixel characters given away free in 2017, are among the oldest collections.
Uses beyond art include tickets, game items, domain names and memberships. The idea is the same each time: a public, transferable record of who holds a unique item.
The boom showed classic signs of a bubble: prices driven by hopes of reselling, trading among small groups, and some wash trading, where people sell to themselves to fake demand. Many 2021 collections now trade for a small fraction of their peak prices, or not at all.
Why it matters
NFTs extend blockchains from money to the ownership of unique things.
Their boom and bust is a recent, well-documented episode of speculation, useful for anyone studying bubbles.
They raise new questions about what it means to own something digital, and about copyright.
A common mistake
Myth: Buying an NFT means you own the artwork and its copyright.
In fact: You own a token that points to the work. The copyright normally stays with the creator unless a licence says otherwise, and anyone can still view or copy the image file.
Questions people ask
Why pay for an NFT if anyone can copy the image?
For the reasons people buy a signed print or an original: provenance, status, belonging to a community, or the hope of reselling. What is sold is the record of ownership, not the pixels.
What does non-fungible mean?
Not interchangeable. One bitcoin equals any other bitcoin, so bitcoins are fungible; NFT #1234 is a different item from NFT #1235.
Are NFTs dead?
Trading fell far below its 2021–22 peak and many collections lost most of their value, but NFTs are still made and used, for collectibles, tickets and game items.
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About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- Ethereum price: Coin Metrics Community Network Data, metric PriceUSD. License: CC BY-NC 4.0.
- Crypto data: Coin Metrics Community Network Data, used under the CC BY-NC 4.0 license.
- This page explains a term. It is not investment advice.