Glossary

NFT

Plain-language definition Crypto glossary

Key takeaways

An NFT (non-fungible token) is a unique blockchain token that represents ownership of a specific item, and unlike a cryptocurrency it cannot be swapped one-for-one with another.
An NFT is minted by a smart contract that records who owns a particular token ID, usually pointing to metadata such as an image, video, document or in-game item.
NFTs provide a standard way to prove digital scarcity and ownership, though their value is highly subjective and owning the token does not automatically transfer copyright in the underlying work.

Definition

An NFT (non-fungible token) is a unique blockchain token that represents ownership of a specific item. Unlike a cryptocurrency, where every unit is interchangeable, each NFT is one of a kind and cannot be swapped one-for-one with another.

How it works

An NFT is created, or “minted,” by a smart contract that records who owns a particular token ID. The token usually points to metadata — an image, video, document or in-game item — and the blockchain provides a public, verifiable record of ownership and transfer history. Ownership of the token does not automatically transfer copyright in the underlying work.

Why it matters

NFTs introduced a standard way to prove digital scarcity and ownership, with applications in art, collectibles, gaming, event ticketing and identity. Their value is highly subjective and market-driven, and the convenience of off-chain metadata can be a weak point if it is not stored durably.

Example

A digital artwork sold as an NFT records the buyer’s address on-chain as the current owner of that specific token.

FAQ

Frequently asked questions

How is an NFT different from a cryptocurrency?

With a cryptocurrency, every unit is interchangeable, so one coin can be swapped one-for-one with another. An NFT is non-fungible, meaning each one is unique and represents a specific item that cannot be exchanged like-for-like.

Does owning an NFT mean I own the copyright?

Not automatically. Owning the token gives you a verifiable record of ownership of that token, but it does not by itself transfer copyright in the underlying work. Rights to the underlying art or content depend on any separate license the creator grants.

What can NFTs be used for?

NFTs introduced a standard way to prove digital scarcity and ownership, with applications in art, collectibles, gaming, event ticketing, and identity. Their value, however, is highly subjective and market-driven, and reliance on off-chain metadata can be a weak point. This is educational information, not financial advice.