What is an NFT
Non-fungible tokens (NFTs) are unique digital assets that represent ownership of an item or piece of content on a blockchain. The concept of NFTs emerged from the need to give digital assets a sense of ownership and scarcity, enabling creators and collectors to trade and showcase their digital art, music, videos, and other forms of content as tokens.
The first notable NFT project, a game called CryptoKitties, was launched in 2017 and allowed users to buy, sell, and breed virtual cats, each represented by a unique NFT. From that point onwards, NFTs started gaining momentum, until in 2021 the NFT market exploded with various platforms and marketplaces like OpenSea, Rarible, and Foundation facilitating the buying and selling of NFTs. This surge in interest has led to the widespread adoption of NFTs across various industries, including art, gaming, and even real estate.
What does Non-Fungible Mean?
Non-fungible means every NFT is one-of-a-kind and cannot be exchanged for another on a one-to-one basis. For example, two NFTs in the same NFT collection, such as CryptoPunks, can have different features and different prices.
Fungible vs Non-Fungible
By definition, non-fungible tokens are unique and not interchangeable, as opposed to fungible cryptocurrencies, where any one token can be exchanged for another, and both tokens have the same value when exchanged for something else.
Unlike fungible tokens, such as ERC-20 tokens, non-fungible tokens can have metadata, such as images or video, attached to each individual token. This is made possible by using ERC-721 or ERC-1155 token standards.
What was the First NFT?
The first ever NFT was a video clip added to metadata on the Namecoin blockchain in 2014, presented and sold in the New Museum of Contemporary Art in New York City. The first NFT on the Ethereum blockchain was a collection of digital artworks named Curio Cards.
What is the Best NFT Marketplace?
Based on trading volume, the best Ethereum NFT marketplaces are Blur, Opensea, and X2Y2. The most popular Solana NFT marketplace is Tensor, followed by Magic Eden, and MOOAR. The most widely-used Ordinals NFT marketplaces are Gamma, Ordzaar, Magic Eden, Unisat, and OKX NFT marketplace.
What are the Most Common Types of NFTs?
NFTs can be categorized into several types based on their use cases and the underlying assets they represent.
Art NFTs: Digital artworks sold as NFTs, allowing artists to monetize their creations. For example, Beeple's "Everydays: The First 5000 Days" sold for $69 million.
Collectible NFTs: Unique digital collectibles that can be traded, such as trading cards or virtual pets. An example is NBA Top Shot, which allows users to buy and sell officially licensed NBA highlight clips.
Gaming NFTs: In-game assets that players can own and trade, such as skins, weapons, or characters. An example includes Axie Infinity, where players can buy and breed virtual creatures called Axies, which can be sold for substantial amounts.
How do NFTs Work?
NFTs are created, transferred, and exchanged using blockchain technology, which ensures the authenticity and ownership of each token.
When someone purchases an NFT, the transaction is logged on the blockchain, and the new owner receives the token in their digital wallet. This decentralized nature of NFTs ensures that they cannot be tampered with or duplicated, providing a layer of security for both creators and collectors. When an NFT is minted, it is assigned a unique identifier and associated metadata, which can include details such as the creator, ownership history, and a link to the digital asset itself.
On the Ethereum blockchain using the ERC-721 and ERC-1155 token standards, while Solana uses the SPL token standard for both fungible and non-fungible tokens. These standards define the unique properties of each NFT and allow for the creation of non-fungible tokens that can represent ownership of digital or physical assets.
The Ordinals Protocol is a decentralized protocol that enables the creation, management, and transfer of unique, non-fungible digital assets, on the Bitcoin blockchain, allowing for the inscription of arbitrary data, including images, text, and other media, onto individual satoshis.
Examples of NFTs
Example 1: Bored Ape Yacht Club (BAYC) is a highly successful NFT collection featuring 10,000 unique cartoon ape avatars. The Bored Ape NFT collection has gained significant popularity and recognition in the NFT and broader crypto communities, especially after launching its own fungible ERC20 token, ApeCoin.
Example 2: The 45th and 47th President of the United States Donald Trump released his own Trump NFT collection back in December 2022, with a new wave of popularity hitting the collection following the launch of the official TRUMP token three days before the inauguration on January 20, 2025. Two weeks earlier, he released a new NFT collection using Ordinals. The 2022 Donald Trump NFT collection can be found on OpenSea and Rarible, while the 2025 one is available on Magic Eden.
Example 3: Funko Pop, the manufacturer of collectible figurines, has released an NFT collection of digital figurines based on Adventure Time, Stranger Things, Squid Game, and many other pop-culture titles.
