NFT

A Non-Fungible Token (NFT) is a cryptographic token on a blockchain that represents a unique asset. Unlike fungible tokens (where each unit is interchangeable, like one Bitcoin equals another Bitcoin), each NFT has a distinct identity and cannot be substituted for another.

How NFTs Work:

1. A creator mints an NFT by deploying a smart contract (usually ERC-721 or ERC-1155 on Ethereum)
2. The token contains metadata pointing to the asset (image, video, document)
3. Ownership is recorded on the blockchain and is publicly verifiable
4. NFTs can be bought, sold, and transferred on marketplaces
5. Creators can embed royalty payments for secondary sales

NFT Use Cases:

Technical Standards: - ERC-721: Standard for unique tokens (one token, one ID) - ERC-1155: Multi-token standard (batch operations, semi-fungible) - ERC-6551: Token-bound accounts (NFTs that own other assets)

Market History: NFT trading volume peaked in January 2022 at over $5B monthly. By 2023, volume had dropped over 95%. The market has since shifted from speculative profile pictures toward utility-focused applications in gaming, identity, and real-world asset tokenization.

Common Criticisms: - Environmental impact (though reduced after Ethereum's move to PoS) - Metadata often stored off-chain (IPFS or centralized servers) - Speculation and wash trading inflated market activity - Copyright enforcement challenges