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Basics

NFTs (Non-Fungible Tokens) Explained

By Emmanuel Akwaboah · Aug 2, 2025

What’s All the Hype About NFTs?

In 2021, a digital artwork sold for $69 million. But here’s the catch—it wasn’t a painting or a sculpture. It was an NFT. Since then, people around the world—from artists and celebrities to gamers and investors—have been talking about NFTs.

You’ve probably seen terms like "NFT drop", “minting”, or “digital collectibles” online and wondered:

What exactly is an NFT, and why are people spending money on things they can’t physically touch?

This guide will walk you through everything you need to know about NFTs, from what they are to how they're used, and even the risks involved.

 

What Is an NFT?

NFT stands for Non-Fungible Token.

To break it down:

  • Non-Fungible means it’s unique and cannot be replaced by something else.

  • A Token is a unit of data stored on a blockchain (a secure, decentralized ledger).

So, an NFT is a one-of-a-kind digital asset whose ownership and authenticity are recorded on the blockchain.

Unlike Bitcoin, where one coin is equal to another, each NFT is unique. Think of it like a digital certificate of ownership for art, music, videos, tweets, memes, and even virtual real estate.

Fungible vs. Non-Fungible: An Example

Let’s say you and a friend each have a $10 bill. You can swap them, and no one would care—they're the same value. That’s fungible.

Now imagine you own a signed limited-edition comic book. Even if your friend has the same comic book title, your signed version is non-fungible because it’s unique. You wouldn’t want to trade it evenly.

NFTs are digital versions of that rare comic book.

 

How Do NFTs Work?

NFTs are usually created and stored on the Ethereum blockchain, though other blockchains like Solana, Polygon, and Flow also support them.

Here’s a simplified step-by-step process of how NFTs work:

  1. Creation (“Minting”)
    An artist or creator uploads their digital work to a platform like OpenSea or Rarible and mints it into an NFT. This means the file is registered on the blockchain with a unique token ID.

  2. Ownership Proof
    Once minted, the NFT has a verifiable owner whose wallet address is recorded on the blockchain. This record cannot be faked, deleted, or changed.

  3. Buy/Sell/Trade
    NFTs can be bought or sold on marketplaces. Once sold, the new owner is registered on the blockchain.

  4. Royalties
    Creators can program royalties into NFTs. This means they get a percentage (e.g., 5%–10%) every time the NFT is resold.

What Can Be an NFT?

Pretty much anything digital! Examples include:

  • Art: Digital paintings, illustrations, photography

  • Music: Full albums, audio snippets, or rights to songs

  • Videos: Clips from sports games or animations

  • Virtual Items: In-game skins, avatars, weapons

  • Collectibles: Trading cards, GIFs, memes

  • Real-world Assets: NFTs linked to real estate, event tickets, or merchandise

🔥 Real-World Example: Beeple

In March 2021, digital artist Beeple sold his artwork Everydays: The First 5000 Days as an NFT at Christie’s auction house for $69.3 million. The buyer doesn’t own the image in the traditional sense—but they own the only official, verifiable version of it.

 

Where Do You Buy NFTs?

There are several NFT marketplaces where you can buy, sell, and trade NFTs using cryptocurrency (mostly ETH). Popular platforms include:

To buy an NFT:

  1. Create a crypto wallet (e.g., MetaMask)

  2. Buy some ETH or relevant crypto

  3. Connect your wallet to the marketplace

  4. Browse and buy

Why Are NFTs Valuable?

  1. Scarcity: Many NFTs are limited-edition or even one-of-one. Scarcity drives value.

  2. Ownership: Blockchain confirms who owns what. No one can fake or steal that record.

  3. Utility: Some NFTs give you access to communities, games, or future content.

  4. Creator Support: Buying NFTs directly supports artists without middlemen.

  5. Flexibility: NFTs can be resold in secondary markets, often with profits.

 

Use Cases Beyond Art

NFTs go far beyond digital art. Let’s explore some growing use cases:

🎮 Gaming

NFTs represent in-game items you actually own and can trade or sell. Games like Axie Infinity and Gods Unchained are pioneers in this space.

🏠 Real Estate

Companies are experimenting with linking property ownership to NFTs for easier transfers and proof of deed.

🎫 Event Tickets

NFT-based tickets can’t be faked or scalped. They also give fans collectibles post-event.

👩‍💻 Identity & Credentials

NFTs can verify degrees, certifications, or even your identity, stored on-chain and publicly accessible.

What Are the Risks?

Despite the hype, NFTs come with potential downsides:

  • Market Volatility: Prices can spike and crash quickly.

  • Scams and Fakes: Copycat NFTs or fake collections exist.

  • Environmental Concerns: Ethereum used to consume a lot of energy (now improved after the Merge).

  • Legal Grey Areas: NFT laws are still evolving, especially around copyright and resale.

❗ Real-Life Warning:

Some people bought "exclusive" NFTs from anonymous sellers, only to find the artwork stolen or duplicated from somewhere else.

 

How to Stay Safe in the NFT Space

  1. DYOR (Do Your Own Research): Check the artist, project, and community before buying.

  2. Avoid “FOMO”: Don’t rush into buying just because others are.

  3. Use Reputable Wallets: Secure your funds with a trusted wallet like MetaMask or Ledger.

  4. Watch for Gas Fees: Ethereum transactions can be costly. Consider using Layer 2 platforms like Polygon to save.

Are NFTs a Good Investment?

That depends on your goals.

  • If you’re a collector, NFTs can be a way to support artists or own cool digital items.

  • If you’re an investor, know that profits aren’t guaranteed and the market is speculative.

  • If you’re a creator, NFTs offer a new way to monetize your work and connect with your audience.

 

Conclusion: NFTs Are Here to Stay (With Room to Grow)

NFTs have already changed how we view digital ownership, creativity, and value. From art galleries to gaming platforms, they’re carving out space in the digital economy.

But the technology is still young. Whether NFTs evolve into essential digital property or fade into a niche trend depends on how the space develops—especially around utility, regulation, and mass adoption.

If you’re curious, start small. Join a community. Explore platforms. And remember: ownership in the digital world is just beginning.