NFT
Non-Fungible Token
NFT (non-fungible token) is a unique digital unit on a blockchain that confirms ownership of a specific item or its record.
NFT (non-fungible token) is a token in which each instance is unique and not equal to another instance from the same collection. Unlike bitcoin or USDT, where any unit equals any other, an NFT holds a separate identifier and a link to a specific item: an image, video, game asset, ticket, or rights record.
## How it works
The token is created (minted) through a smart contract on a blockchain, most often Ethereum or compatible networks. The ERC-721 and ERC-1155 standards set the rules for ownership, transfer, and identifiers. The file itself is usually stored off-chain, while the token records a link to its metadata. If that link points to an external server, the item can disappear or change even though the token formally exists.
## Where it is used
Collectible images, game assets, community membership, tickets, and tokenization of real-world assets. NFTs are also used in partner and marketing mechanics, for example to issue digital rewards to users, but this depends on jurisdiction and the specific project.
## What affects it
An NFT's price is driven by demand and the liquidity of a specific collection, not by any fundamental value. Liquidity is often low, so selling a token at the expected price can be difficult. Network fees (gas fees) and royalties, which marketplaces do not always enforce, affect the final return.
## Common mistakes and risks
The most common mistake is confusing ownership of a token with ownership of the rights to the image: buyers often receive only a record on the blockchain. Fake collections, inflated trading volume (wash trading), rug pull schemes, and phishing links for signing transactions are widespread. Before signing any request, always check which contract it is and what rights it grants.
FAQ
Is an NFT a cryptocurrency?
No. Cryptocurrency is fungible, meaning each unit equals another. An NFT is unique and tied to a specific item or record.
If I buy an NFT, does that mean I own the image?
Not necessarily. The token confirms ownership of a record on the blockchain, while the rights to the image and the terms of use are determined by the project's terms and the law.
Why are NFTs often associated with fraud?
A low barrier to entry, the difficulty of verifying metadata and liquidity, and the ease of launching fake collections and exit schemes make NFTs attractive to scammers. That is why checking the contract and the project's reputation is important.