A non-fungible token (NFT) is a type of token on a blockchain that represents a unique asset. These can either be completely digital assets or digitised versions of real-world assets. One of the main attractions of NFTs is that they aren’t interchangeable with each other, so they are a definitive proof of ownership.

‍

Fungibility means that an asset’s individual units can be interchanged and are essentially indistinguishable from each other. For example, fiat currencies are fungible because each unit is interchangeable with any other equivalent individual unit. A 1 euro coin is interchangeable with any other genuine 1 euro coin. This is imperative for an asset that aims to act as a medium of exchange.

‍

Fungibility is a desirable property for fiat currency because it allows free exchange, and in theory, there is no way to know the history of each individual unit. However, that obviously is not a beneficial trait for collectible items. The scarcity of collectibles is what gives them value.

‍

What if we could create digital assets similar to Bitcoin (BTC) but instead add a unique identifier to each unit? This would make each of them different from all the other units. Essentially, this is what an NFT is: an authentic, definitively unique tokenised digital asset that cannot be interchanged.