NFT (non-fungible token)
Also called: NFT · non-fungible token · NFTs
Definition
An NFT, or non-fungible token, is a unique token on a blockchain that records ownership of a specific item, such as a digital artwork, collectible, game item or membership pass.
How NFT works
Fungible tokens, like USDT or ETH, are interchangeable: one unit equals another. Each NFT has its own token ID, so one cannot simply replace another. On Ethereum, NFTs commonly use the ERC-721 or ERC-1155 standards. Solana, Bitcoin through Ordinals, and other chains have their own formats.
The token usually points to metadata and an image stored elsewhere, on a server, IPFS or Arweave. Owning the NFT proves you hold that token, but it does not automatically give you copyright or commercial rights to the artwork unless the project's licence says so.
NFT prices depend on demand for a collection, and liquidity can be thin. Many collections sell for far less than their mint price later. Common scams include fake mint sites, impersonated collections and signature requests that let attackers list or transfer your NFTs.
Example
Imagine a collection of 10,000 NFTs minted at 0.05 ETH each, raising 500 ETH. Six months later, the cheapest listing, called the floor price, is 0.02 ETH. You own one and list it slightly above the floor at 0.025 ETH. After a 2.5 percent marketplace fee and a creator royalty of 5 percent, you would receive about 0.0231 ETH, less than half of the original mint price.
Common mistakes
- Assuming owning an NFT gives you copyright over the image.
- Signing a marketplace or listing signature on an unfamiliar site.
- Valuing a collection by its highest recent sale instead of its floor price and volume.
Learn and practise
FAQ
What does owning an NFT give you?
Proof that your address holds a specific token, plus any rights or access the project grants. Intellectual property rights depend on the project's licence.
Can an NFT be copied?
The image can be copied, but the token ID on the blockchain cannot. Copies of the image are not the same token.