What’s an NFT?

NFT stands for “Non-Fungible Token.”  “Non-Fungible” means that it is a unique, one of a kind collectible that cannot be copied, replaced, or recreated.  Cryptocurrencies such as Bitcoin are the opposite.  Bitcoin is fungible because if you trade one for another then you’ll have exactly the same thing.  They are equal in value like how a twenty dollar bill is always worth $20. Conversely, NFTs allow you to own an original, digital collector's item, or “Token.”

An NFT more similarly compares to a limited edition art print, or better yet a short-printed sports trading card.  The serial number on the trading card makes it “NON-FUNGIBLE” because it cannot be replaced.  There is only one of it’s kind in existence. There may be different tiers or rarities (like 1 out of 10), but each has a different serial number associated with it making each one of a kind.  If you decide to trade one for another then you will have a different collectible. 

NFTs can only have one owner at a time and are bought and sold in digital marketplaces similar to how eBay works for the physical realm.  When an investor purchases an NFT they are then stored in their digital wallet.  They may choose to keep it in their portfolio long term in hopes that the value increases, or sell it quickly for a profit now.