An NFT, or Non-Fungible Token, is a digital asset that is unique and can be used as a proof of ownership of a unique object.
The fundamental distinction between currencies such as Bitcoin or Ethereum and NFTs is that the latter is unique. A blockchain keeps the record of the ownership of each token, which means that two tokens cannot have the same value and one cannot be replaced by another.
NFTs are mostly associated with artwork, music, collectibles, photos, virtual land, and game items. The purchase of an NFT grants the buyer a verifiable, blockchain-validated certificate that he is the owner of that item. When the NFT is held by its owner, he owns the original token that the blockchain recognizes as legitimate, even if there are replicas of the image or file on the internet.
The main driver of the popularity of this technology is that it provides artists with new potential avenues for selling their work directly to buyers. The artists can create NFTs, determine their prices, and even receive royalties with each resale—these factors support the NFT market. On the other hand, collectors appreciate NFTs for the aforementioned attributes of rarity, traceability, and the fact that they own something digital that is scarce.
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An NFT is fundamentally an ownership proving tool for digital assets that is secure, transparent, and can be verified via the blockchain. Hence, it opens a new digital market for trading and non-fungible items.