NFT stands for "non-fungible token," or currency. A fungible item, like a dollar bill, is interchangeable and equal to every other dollar note. On the other side, a non-fungible token (NFT) is a unique digital asset that cannot be traded for another NFT. Each NFT is hence a unique object. Blockchain technology is used to transmit NFTs from one owner to the next, creating a digital trail that confirms the sale from one buyer to another. This details the unique ownership rights granted to the buyer (new owner). The physical world counterpart would be a one-of-a-kind collectible asset, like a piece of art, with a certificate of ownership attesting to its authenticity.

The NFT does not require ownership certificates because of blockchain technology. Some NFTs even use blockchain technology to generate a digital ownership certificate for a particular physical object.

Last updated