NFT (Non-Fungible Token)

Unlike regular fungible crypto tokens, which are entirely interchangeable — for example, one SOL is entirely identical to every other SOL in circulation — NFTs are one-of-a-kind. When an NFT is minted (the term used for its creation), it is generated with a unique numerical identifier. This makes them uniquely suited for onchain ownership records.

Some of the most common historic use cases are in digital art and collectibles, where each NFT corresponds to ownership of a particular image, artwork, collectible or video game asset. Famous examples include the CryptoPunks pixel art collection, Pudgy Penguins and NFT game Axie Infinity. Each NFT can have unique properties, rarity and value depending on the collection.

Since these records are stored on the blockchain, NFTs can be moved and traded between crypto wallets and verified by third parties. Smart contracts can also automate processes such as marketplace transactions and royalty payouts to creators.

Beyond digital art and collectibles, NFTs are increasingly being explored for more practical commercial applications. Businesses can use NFTs to represent ownership of physical assets, authenticate luxury goods and track products as they move through supply chains. They can also serve as digital tickets, membership passes or certificates of authenticity.

While adoption remains relatively limited, these applications demonstrate how NFTs can function as digital records of ownership and authenticity rather than simply speculative collectibles.