A non-fungible token (NFT) is a digital asset that represents real-world objects such as music, art, in-game items, etc., that can be bought and sold online with the use of a crypto asset. They have the same underlying coding as that of the cryptos. Although NFTs have been in the market for quite a long time now, they started to gain attraction only in 2021.
The NFT market achieved a staggering feat of generating $41 billion in 2021 alone. Non-fungible tokens are usually one of a kind, unique, and limited digital objects that cannot be traded or exchanged for any other NFT since their values are not equivalent, unlike crypto assets or fiat money, which can be exchanged for an equivalent amount. The fungibility of crypto assets and fiat money makes them a trusted medium for conducting transactions. However, NFTs are different.
Every NFT has a different signature, thus making it difficult to be exchanged with another. A Taylor Swift hoodie cannot be exchanged with that of a BTS T-shirt. Similarly, one Bored Ape Yacht club NFT cannot be traded with another Cryptopunk. NFTs, like crypto assets, exist on the blockchain, typically held on the Ethereum blockchain. An NFT might be minted from digital objects that have both intangible and tangible value such as GIFs, collectibles, graphic art, designer sneakers, video game skins, etc. Even a tweet counts as an NFT. One of the most expensive NFTs was the first ever tweet made by the co-founder of Twitter, Jack Dorsey. This NFT sold for a whopping $2.9 million.