NFT stands for non-fungible token
A non-fungible token is a digital asset that represents a real world item, or digital creation. For example the most popular use of them right now, is in art, by proving ownership and authenticity of a particular artwork.
It also doesn’t always have to be a one off, sometimes an artist will release 10 of the same artwork (just like in the real world with limited edition prints), but instead it could be 10 NFT’s that represent that particular artwork, and owning one of those NFT’s would prove the authenticity of one of those 10.
Another way to explain it, would be for example, ‘The Mona Lisa’, one of the most famous paintings in the world. There are countless photos, prints, and forgeries, but if an NFT was attached to it, proving its authenticity, then whoever owned that NFT would have the real Mona Lisa.
Non-fungible means that it is unique. For example, when you swap a pound for another pound, it is fungible, as you are getting the same thing, swap bitcoin for bitcoin, again fungible. But swap an NFT for another NFT, and it is non-fungible, as each NFT contains a unique digital signature.
Apart from proving authenticity of the item, NFT’s can also be programmed. For example, an artist could release his artwork as an NFT and program a royalty into it, so that every time that artwork is sold on, a percentage of the sale will automatically go to the artist.
This opens up a realm of possibilities, from digital trading card NFTs that give you access to exclusive merchandise, to music NFTs that reveal a backstage pass to meet the band.
At the moment no, but in the near future, and with regulation, even car loans using your logbook could possibly be attached to an NFT!
Apart from art, some of the other items that have been bought, sold and used in representation as NFTs have been – gifs, video’s, music, collectables and video game avatars.
Jack Dorsey, the co-founder of Twitter even sold his first tweet as an NFT for over $2 million!!!
So nearly anything!