A non-fungible token (NFT) is a special type of cryptographic token that represents something unique. Unlike cryptocurrencies like Bitcoin and many other utility tokens, NFTs are not mutually interchangeable.
A fungible item, such as money, can be exchanged for another. A Real note can be replaced, as long as it has the same value. Infungible items, on the other hand, are works of art, rare objects, unique specimens, etc.
The non-fungible token represents something specific and individual, and cannot be replaced.
In fact, they can be used to represent ownership of any single asset, such as a deed to an item in the digital or physical realm.
Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership and the possibility of interoperability of assets across multiple platforms. NFTs are used in various applications that require unique digital items such as cryptographic art, crypto-collectibles, and crypto games.
The first use of gaming-related NFTs was crypto-collectable card games. Projects like Age of Chains and Rare Pepes have been using the Counterparty platform protocol to issue blockchain exchange cards as NFTs since 2016.
The NFT world is relatively new. In theory, the scope of NFTs is anything unique that needs proven ownership. Here are some examples of NFTs that exist today, to help you get an idea:
- The unique digital artwork.
- A unique sneaker in a limited-run fashion line.
- An in-game item.
- An essay.
- The digital collectible.
- A domain name.
- A ticket that gives you access to an event or a coupon.