Definition of NFT: Understanding non-fungible tokens and their digital revolution

What is an NFT? The fundamentals

NFT ( non-fungible tokens ) are unique digital assets stored on the blockchain that certify ownership of specific items. Unlike traditional digital files that can be copied infinitely, each NFT has a distinct and verifiable identity. Whether it's virtual tickets, digital artworks, or collectibles, NFTs establish a publicly traceable proof of ownership in a decentralized database.

This technology completely transforms the way we conceive of ownership of digital assets. For the first time, creators can tokenize their creations and sell them as unique items, while collectors gain access to truly irreplaceable resources.

The meaning of “non-fungible” explained simply

Understanding the NFT definition starts by breaking down the term “non-fungible”. Unlike currencies or cryptocurrencies that are fungible (, meaning they are interchangeable without loss of value), non-fungible assets cannot be exchanged on a direct equivalence basis.

Let's take a concrete example: you can swap one euro for another euro without difference. But you cannot exchange a masterpiece painting for another painting of the same market value, because each has its own characteristics. This uniqueness creates a subjective value: what buyers are willing to pay for this specific singularity.

Non-fungible objects particularly attract collectors in search of verified rarity. Their value derives directly from this irreplaceable nature and the subjective appreciation that the market assigns to them.

The technical functioning of NFTs

The blockchain: security foundation

NFTs are based on blockchain technology, which provides a decentralized and immutable ledger. Each transaction and each change of ownership are permanently recorded, allowing for the complete history of an NFT to be traced. This transparency facilitates the verification of authenticity and legitimacy when the asset changes hands.

Smart contracts: automation without intermediaries

Smart contracts are self-executing programs that automate the issuance, management, and transfer of NFTs. With these smart contracts, there is no longer a need to rely on an intermediary to validate a transaction. The conditions are applied automatically, reducing costs and delays.

Token standards: ensuring interoperability

For NFTs to function across different platforms, technical standards have been established. ERC-721 on Ethereum and BEP-721 on BNB Chain are the most widely adopted standards. These standards define uniform rules for the creation, management, and exchange of tokens, ensuring that an NFT created on one blockchain can be recognized and traded on other compatible ecosystems.

Minting: the creation of an NFT

The process called “minting” or “issuance” is the creation phase. Using smart contracts, a digital file is converted into a cryptographically unique asset on the blockchain. The buyer then acquires ownership of the unique identifier (ID of token) associated with this specific asset, thereby obtaining the exclusive rights of use, display, and interaction.

Current applications of NFTs transforming industries

NFTs are redefining notions of ownership and digital value, creating unprecedented opportunities. Here's how they apply in practice:

Art and digital creation

For artists, NFTs represent a new channel for direct monetization. By tokenizing their creations, they can sell authenticated digital copies as unique works, preserving the originality of each piece. Collectors, on the other hand, benefit from the ability to showcase their acquisitions in virtual galleries, trade them on secondary markets, or even lend them to other users.

The gaming worlds and gaming

Games that integrate NFTs offer players the opportunity to truly own their items and characters. These gaming assets can be traded on external markets, creating an ecosystem where gaming achievements have real economic value. Virtual real estate represented as NFTs allows players to generate passive or active income from their investments in the game.

Decentralized financing ( NFT staking )

Some DeFi platforms allow NFT holders to use them as collateral to generate rewards. This staking approach offers a way to earn interest while retaining ownership of their digital assets.

The revolutionized ticketing

Event organizers can issue NFTs as tickets, providing an immutable proof of access and attendance rights. Unlike traditional digital tickets, NFT tickets can be freely transferred and resold without intermediaries. They can also come with exclusive benefits: access to VIP areas, limited edition products, or reserved digital content.

Notable Examples of the NFT Market

CryptoPunks: pioneering and iconic collectibles

Launched in 2017, CryptoPunks is one of the first NFT projects and remains one of the most prestigious. The collection includes 10,000 unique characters algorithmically generated in 8-bit pixel art. Each CryptoPunk has distinct traits and attributes, making them appealing to collectors around the world. The success of the project has paved the way for a new era of collectible digital art.

Bored Ape Yacht Club: convergence of art and exclusive access

The Bored Ape Yacht Club (BAYC) is a collection of 10,000 hand-drawn apes, each showcasing different characteristics. Beyond their artistic value, these NFTs grant their owners access to private events and exclusive virtual spaces. They embody the bridge between pure digital art and tangible community experiences.

Decentraland: virtual real estate and metaverse

Decentraland is a virtual reality platform built on Ethereum offering a decentralized marketplace. Users trade virtual land parcels and various in-game items as NFT. The project places Decentraland at the forefront of the expansion of the metaverse and the democratization of virtual real estate.

Clarifications on Misconceptions Regarding NFTs

Common misconception 1: “NFTs are completely safe”

Although NFTs inherit the security mechanisms of their underlying blockchain, the risks remain real. Phishing attempts, exploitation of vulnerabilities in smart contracts, and counterfeiting of NFTs are tangible threats. There is also the risk of unauthorized use of copyrighted material.

Another factor to consider: market volatility. While some NFTs have reached dizzying prices, the market remains speculative and fluctuating. Like any investment, long-term stability is never guaranteed. Finally, the level of security of an NFT varies depending on the blockchain that hosts it, with some ecosystems benefiting from more robust infrastructure than others.

Common misconception 2: “NFTs and cryptocurrencies are identical”

Although NFTs and cryptocurrencies both use blockchain technology, they pursue distinct objectives. Cryptocurrencies are designed to facilitate value exchanges. They are fungible: each unit of the same currency is interchangeable without difference.

You can trade one bitcoin for another without value modification. NFTs, on the other hand, are fundamentally different. Each NFT has unique characteristics and is not directly exchangeable for another NFT on the basis of equivalence. Their value lies precisely in this uniqueness and rarity, in absolute contrast to the fungible nature of standard cryptocurrencies.

Summary: why NFTs are reshaping the digital landscape

NFTs are unique digital assets anchored in the blockchain, which establish and certify the ownership of the objects they represent. Their growing adoption demonstrates how this technology creates new opportunities for creators eager to monetize their work, and for collectors seeking authenticated possession of singular assets.

However, investing in NFTs carries inherent risks: potential fraud, price volatility, and long-term uncertainty. While they share some characteristics with cryptocurrencies, NFTs are distinguished by their non-fungible nature, opening up authentically unique digital possibilities.

Understanding the definition and functioning of NFTs is essential for navigating the ongoing evolution of the digital and decentralized world.