Non-fungible tokens (NFTs) are assets that have been tokenized via a blockchain. They are assigned unique identification codes and metadata that distinguish them from other tokens.
NFTs can be traded and exchanged for money, cryptocurrencies, or other NFTs—it all depends on the value the market and owners have placed on them. For instance, you could use an exchange to create a token for an image of a banana. Some people might pay millions for the NFT, while others might think it worthless.
Cryptocurrencies are tokens as well; however, the key difference is that two cryptocurrencies from the same blockchain are interchangeable—they are fungible. Two NFTs from the same blockchain can look identical, but they are not interchangeable.
KEY TAKEAWAYS
NFTs (non-fungible tokens) are unique cryptographic tokens that exist on a blockchain and cannot be replicated.
NFTs can represent digital or real-world items like artwork and real estate.
"Tokenizing" these real-world tangible assets makes buying, selling, and trading them more efficient while reducing the probability of fraud.
NFTs can represent individuals' identities, property rights, and more.
Collectors and investors initially sought NFTs after the public became more aware of them, but their popularity has since waned.
