NFT
An NFT (non-fungible token) is a unique blockchain record tied to a specific item, such as an image. Two NFTs cannot be swapped one for one.
How it works
Non-fungible means each token is unique. One bitcoin equals any other bitcoin, but an NFT has its own ID and properties. Most NFTs are created by a smart contract following the ERC-721 or ERC-1155 standards on Ethereum, though they exist on other chains too.
Usually the image or file itself is not stored on the blockchain but on a separate server or on IPFS (a distributed storage network). The blockchain holds the ownership record and a link to the file. The token proves an ownership record, not necessarily the copyright to the file: the rights depend on each project's terms.
NFTs are used for digital art, collectibles, in-game items, tickets and domain names. Their price rests only on demand and can swing hard. Selling a token can be difficult: there may be few buyers, and you pay network and marketplace fees along the way.
Two ETH are the same, so you can trade them one for one. Two NFTs from the same collection are not: one is rare, the other common, and they sell for different prices.
You bought an NFT for 0.5 ETH and paid 0.01 ETH in network fees, and the marketplace takes 2.5% when you sell. Just to break even, someone has to buy it for about 0.52 ETH. If interest in the collection fades, there may be no buyer at all.
Do not buy an NFT because of social media hype, and do not open links to a "free giveaway" or "mint" sent in direct messages. Scammers ask you to sign a transaction that gives them access to every token in your wallet. Sign only what you understand, check the contract address on the project's official site and keep valuable items in a separate wallet.
Questions and answers
What is an NFT in simple terms?
It is a digital certificate for a unique item, recorded on a blockchain. It shows which wallet currently owns that token.
Do I own the image when I buy an NFT?
Not necessarily. You own the token, while copyright depends on the project's license and often stays with the creator.
Can you make money with NFTs?
You can also lose money. Most collections lose much of their value over time and NFTs can be hard to sell, so only put in what you can afford to lose.
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Updated: 2026-10-19