What is an NFT?

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NFTs, or non-fungible tokens, are unique digital assets representing a specific data unit stored on a digital ledger such as a blockchain network. This data can also represent a real-world item in the digital realm, such as art, music, videos, and more. Unlike cryptocurrencies, each NFT is one-of-a-kind and cannot be exchanged for something similar.

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Note:

MoonPay supports NFTs on all major blockchains.

How are NFTs different from cryptocurrencies?

NFTs are one of a kind and naturally exclusive based on their specific data, in contrast to cryptocurrencies, which are fungible and interchangeable.

For example, if you exchange some of your bitcoin for another bitcoin, you will still have bitcoin, and the exchanged bitcoin will still have the same value. However, NFTs are intentionally created to be unique and collectible, ensuring each is unique and has different specific data.

Key Feature of NFT

  • Uniqueness: Every NFT is different, making them rare and one-of-a-kind.
  • Information: NFTs contain details about their characteristics, origin, and creator.
  • Blockchain Technology: Utilizing blockchain technology, NFTs establish ownership transparency.
  • Versatility: NFTs can represent various digital items and work across blockchain networks.

These features of NFTs make them a reliable digital certificate of ownership for a specific item or content, enabling their sale, trade, and even use as virtual currency within various online games.

How do NFTs work?

includes information like the name, collection, image, and unique features. This metadata provides publicly verifiable proof of ownership.

On the Ethereum blockchain, NFTs are created using popular token standards such as ERC-721 and ERC-1155.

  • ERC-721 enables the creation of non-fungible tokens. This allows the creator to issue NFTs via smart contracts. These contracts streamline the creation, transfer, and overall management of NFTs.
  • ERC-1155 allows for the issuance of semi-fungible tokens. This is commonly used for in-game NFTs, representing items like weapons, health packs, or skins.

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Note:

For more information regarding NFTs, please see our learn article about NFTs.

Updated 3 months ago