What is an NFT?
An NFT (Non-Fungible Token) is a unique digital record of ownership on the blockchain. "Non-fungible" means non-interchangeable — unlike Bitcoin where every BTC is identical, each NFT is unique and indivisible. An NFT can represent digital art, a gaming item, music, an event ticket or a document of ownership.
How do NFTs work?
NFTs use the ERC-721 (or ERC-1155) smart contract standard on the Ethereum network. Each token has a unique ID and metadata (image, description, attributes) typically stored on IPFS (decentralized storage). Ownership is proven by the private key — whoever controls the key, controls the NFT.
NFT marketplaces
- OpenSea — largest multi-chain NFT marketplace
- Blur — pro trader platform, low fees, popular for flipping
- Magic Eden — Solana and multi-chain, gaming NFTs
- Foundation — curated art, creator-focused
Web3 and decentralized applications (dApps)
Web3 is a vision of the internet where users own their own data and digital assets through blockchain. Unlike Web2 (where Facebook and Google hold your data), Web3 applications (dApps) communicate directly with smart contracts — no central server.
NFT risks
- Liquidity — hard to sell an NFT at a fair price outside a bull market
- Wash trading — artificial price inflation between connected addresses
- Rug pull collections — team takes the money and abandons the project
- IP issues — owning an NFT doesn't mean owning the copyright