An NFT is a non-fungible token. They are unique in that they cannot be replaced, unlike the fungible tokens in crypto, such as ETH and BTC. Think about it this way – when you go to purchase a car with USD, what do you think of? No one thinks of the serial number or any other specific attribute of the bill itself, but instead what it represents – value transfer. When you go to purchase an NFT, however, there are unique attributes that make up each token which you can view before purchasing. Imagine if someone wanted to sell their car for half of its value because they knew that a specific scratch on one side existed? This is where NFTs come into play.
The example of purchasing a car with USD is not so far-fetched when thinking about the growth in NFTs. If you’ve ever purchased anything online, chances are it was delivered in some form or another to your front door – many times in the form of an NFT tracking label for USPS, FedEx or UPS. These labels have a serial number which is specific to the object being shipped and each one of them exist on a limited supply – there can never be another perfectly identical one. While this may not seem like a big deal, think of the implications this has for items that may have significant value. For example, if I wanted to purchase a Picasso painting from someone, I would like to know that what I was paying for existed and there is no way I can get it another time.