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What is a non-fungible token (NFT)?

NFTs (or “non-fungible tokens”) are a special kind of cryptoasset in which each token is unique — as opposed to “fungible” assets like Bitcoin and dollar bills, which are all worth exactly the same amount. Because every NFT is unique, they can be used to authenticate ownership of digital assets like artworks, recordings, and virtual real estate or pets.

Why are NFTs important?

You can think of NFTs as being kind of like certificates of authenticity for digital artifacts. They’re currently being used to sell a huge range of virtual collectibles, including:

• NBA virtual trading cards 

• Music and video clips from EDM stars like Deadmau5

• Video art by Grimes

• The original “nyan cat” meme 

• A tweet by Dallas Mavericks owner and entrepreneur Mark Cuban 

• Virtual real estate in a place called Decentraland  

As as Bitcoin and other crypto has boomed in popularity over the last year, NFTs have also soared — growing to an estimated $338 million in 2020. Each NFT is stored on an open blockchain (often Ethereum’s) and anyone interested can track them as they’re created, sold, and resold. Because they use smart contract technology, NFTs can be set up so that the original artist continues to earn a percentage of all subsequent sales.