Definition
A non-fungible token or NFT is a cryptocurrency token that acts as a representation of a unique asset. They are tokenized versions of digital or real-world assets.
Understanding the term
NFTs evolved from the ERC-721 standard, which defines the minimum interface — ownership details, security, and metadata of gaming tokens. They function as verifiable proofs of ownership and authenticity within a blockchain network. Since they are unique, NFTs cannot be interchanged with each other and introduce scarcity into the digital world.
NFTs have several use cases such as representing physical assets such as real estate and artwork. By harnessing the power of blockchain, NFTs can also remove intermediaries and connect artists with audiences or for identity management, as well as be used by various DApps to allow the creation and ownership of unique collectibles and digital items.
NFTs can be transferred between applications with relative ease. They can be used in several fields such as video games, digital identity, licensing, certificates, or fine art.
Takeaway
NFTs are unique cryptocurrency tokens that exist on a blockchain and are unique. Tokenizing real-world assets through NFTs make buying, selling, and trading more efficient while reducing the probability of fraud.