NFT stands for Non-Fungible Tokens. It’s easiest to think of NFTs as a file format. We use file formats – like jpeg, pdf, or xlsx – to transfer information or value on the internet. NFTs are a file format that transfers data and value on blockchain networks like Ethereum, Solana, and many others. Since NFTs exist on blockchains, these tokens provide for digital ownership (a token in a person’s wallet) and transparency (all activity is recorded on a blockchain).
The term non-fungible refers to the concept of fungibility. A good is said to be fungible if it is identical and interchangeable. For example, one dollar is worth one dollar. You would happily swap dollars with another person since we all agree they have the same value. Comparatively, an item is said to be non-fungible if it is unique. Lots of items are non-fungible including diamonds, houses, and baseball cards. No two of these items are the same, diamonds have different colors and cuts while houses, even in cookie-cutter neighborhoods, have different locations which affect how light comes into the house.
An NFT is simply a token (or piece of information) that is unique. A common example of an NFT might be a digital trading card or piece of digital art, such as the one in the image above created by @DrifterShoots and owned by our CIO, Jeff Cheek. Through the digitization of ownership as well as the ability to truly own something unique in the digital ecosystem may eventually change the way we hold our digital artwork or music as well as where we record our physical assets such as your home or cars.