What is an NFT? NFT stands for “non-fungible token”. Basically, it is a digital certificate that represents the ownership rights to a unique digital object or asset on the blockchain.
Fungible tokens are interchangeable and have the same value. Examples include traditional currencies such as the US dollar or Ethereum tokens such as ERC-20, where each unit is of equal value. For example, if you exchange one US dollar for another US dollar, the value does not change.
Non-fungible tokens (NFTs), on the other hand, are unique and non-exchangeable. Each NFT represents something unique, be it a digital work of art, a collector’s item or a specific property right. Each NFT has individual characteristics and its own value. Even if two NFTs display the same digital image, they may differ in their ownership, history or other unique characteristics, making them non-interchangeable.
NFTs use this uniqueness to represent digital possessions, which makes them particularly attractive in areas such as digital art, collectibles and games. Their uniqueness and distinctiveness are at the core of their value and differentiate them from fungible tokens.
