NFT stands for Non-Fungible Token. It is a digital asset ownership certificate based on blockchain technology. We can understand it as a "certificate" of digital assets registered on the blockchain. Once a digital asset is minted as an NFT, it will be stored permanently on the blockchain, and it will be unique and unchangeable. There are many types and applications of NFTs. Before going into a detailed introduction, let's first understand a key term: fungibility.
What is fungibility?
To understand this concept from the perspective of its meaning, "fungible" is an economic term that means "interchangeable and replaceable". It is used to indicate that something within each unit can be exchanged with something else of the exact same type. For example, US dollars are interchangeable, you and your friend can exchange one-dollar bills with each other. After the exchange, each person's purchasing power remains the same. Therefore, it is fungible.
Non-fungibility and NFTs
If something is non-fungible, it means that it cannot be replaced. It represents some unique value, which is the essence of NFTs! Non-fungible tokens refer to digital certificates stored on a public, verifiable distributed database, also known as a blockchain. The information on this digital certificate, also called a smart contract, makes each NFT unique. Since any two NFTs cannot be exchanged, they become non-fungible in nature.
There are many examples of NFTs, including digital artworks, collectibles, virtual reality items, cryptocurrency domain names, ownership records of physical items, and more!