NFTs (Non-Fungible Tokens) are individually unique digital tokens representing ownership of specific assets. Unlike fungible tokens like ETH or USDC, where each unit is identical, NFTs possess distinct properties that make them irreplaceable and verifiably scarce. This uniqueness enables the tokenization of digital art, collectibles, real estate, and more.
The Internet of Assets: NFTs and Ethereum
NFTs address key challenges in today’s digital landscape by replicating physical asset traits—scarcity, uniqueness, and proof of ownership—without centralized control. For example:
- Own music files across Ethereum apps, free from platform restrictions (e.g., Spotify).
- Trade social media handles securely, immune to arbitrary revocation by providers.
NFT Internet vs. Traditional Internet
| NFT Internet | Traditional Internet |
|---|---|
| True ownership—only you can sell/swaps assets. | Rented access—platforms can revoke assets. |
| Provably unique—no two NFTs are alike. | Copies indistinguishable from originals. |
| Public blockchain verification of ownership. | Institutional control over ownership records. |
| Interoperable with Ethereum smart contracts. | Walled gardens—platform-specific infrastructure. |
| Global marketplace for creators. | Geographical/platform restrictions apply. |
| Programmable royalties for creators. | Middlemen retain most profits. |
Practical Uses of NFTs
NFTs enable diverse applications:
- Event attendance proof (e.g., POAPs).
- Course completion certificates.
- In-game assets with true ownership.
- Digital art monetization.
- Tokenized real-world assets (e.g., real estate).
- Decentralized domains (e.g., ENS:
ethereum.eth).
Example: An artist can mint NFTs linked to their artwork, embedding royalties (e.g., 5% per resale) and proving authenticity via blockchain. Buyers verify ownership effortlessly across Ethereum apps.
Ticketing Use Case: Event organizers issue NFTs as tickets, eliminating scalping and verifying authenticity via contract addresses.
👉 Explore Ethereum’s ENS domains
How NFTs Work
NFTs are created via Ethereum smart contracts (e.g., ERC-721, ERC-1155), which:
- Generate unique NFTs with IDs/metadata.
- Assign ownership to Ethereum addresses.
- Enforce rules (e.g., royalties, supply caps).
Security: Ethereum’s tamper-proof blockchain ensures NFT integrity. Attacks are economically unviable (costing millions of ETH). Users must practice wallet security to avoid phishing/scams.
👉 Learn more about blockchain security
FAQ
Q: Can NFTs be copied?
A: While NFT metadata can be replicated, ownership is blockchain-verified, making counterfeits irrelevant.
Q: How do creators earn from NFTs?
A: Smart contracts can automate royalties (e.g., 5% of resale value).
Q: Are NFTs environmentally costly?
A: Ethereum’s shift to Proof-of-Stake (PoS) reduced energy use by ~99.9%.
Q: What’s the difference between ERC-721 and ERC-1155?
A: ERC-721 mints unique NFTs; ERC-1155 supports batches (e.g., game items).
Further Reading
Page last updated: June 18, 2025