What are non-fungible tokens?

Non-fungible tokens, often referred to as NFTs, are blockchain-based tokens that each represent a unique asset like a piece of art, digital content, or media. An NFT can be thought of as an irrevocable digital certificate of ownership and authenticity for a given asset, whether digital or physical.

What are the key characteristics of a non-fungible token?

Non-fungible tokens (NFTs) are designed to be i) cryptographically verifiable, ii) unique or scarce and iii) easily transferable.

Leveraging cryptographic signatures native to the blockchain on which an NFT is issued, one can easily determine the origin and the current owner of the asset in question in seconds.

How is a non-fungible token created?

A non-fungible token is created by an artist, creator, or license-holder through a process called minting. Minting is a process that involves signing a blockchain transaction that outlines the fundamental token details, which is then broadcasted to the blockchain to trigger a smart contract function which creates the token and assigns it to its owner.

Under the hood, a non-fungible token consists of a unique token identifier, or token ID, which is mapped to an owner identifier and stored inside a smart contract. When the owner of a given token ID wishes to transfer it to another user, it is easy to verify ownership and reassign the token to a new owner.

What types of assets can non-fungible tokens be used for?

Non-fungible tokens can be created to represent virtually any asset, whether physical, digital or metaphysical. However, the most common NFT assets are digital art, digital collectible items, pieces of content like video or audio, and event tickets.

What types of use cases are non-fungible tokens being utilized for?

NFT event tickets — companies can distribute and sell tickets to events using NFTs, reducing friction for verification of ownership and authenticity and helping to eliminate fraud. Furthermore, there are infinite possibilities for post-purchase collectability of tickets through exclusive experiences and digital art.

Fan/customer engagement – brands or organizations can issue or sell NFTs that represent exclusive collectibles, products, experiences, or voting rights for the future development of a product or service in order to deepen the engagement customers / fans have with the brand/organization.

In-game items – video games are walled gardens today, players do not own their digital items and secondary markets are hard to implement. NFTs can be used to create a widely varied ecosystem of in game digital items that can be bought sold and exchanged on open secondary markets and used across a broader gaming ecosystem rather than anchored to one game