What is an NFT?
NFT stands for non-fungible token. As a token of my appreciation I might give you a thank you card with some cash in it. Unfortunately this wouldn’t be considered an NFT because the cash is fungible and so is the card.
Something is fungible if it can be easily replaced by another one that’s virtually identical or just like it. One twenty dollar bill is the same as another. They all have the same value and the same usefulness, so there’s no difference between one and the next.
What if i were to give you something else like a baseball? Unfortunately that’s also considered fungible, because there are millions of baseballs in the world and they’re all pretty much the same. One can easily replace another.
But what if the baseball is signed? Now it might be a little different story. Maybe it was signed by someone famous. Maybe it’s from a special event. In that case it might not be easily replaceable by another. There may not be one just like it, so it’s non-fungible.
The same thing could happen with the token instead of the card as a token of my appreciation i could give you a certificate of authenticity. The certificate of authenticity would be unique as well and it might represent a unique object in which case. They might have an unusual value. They may be hard to replace. They may be one of a kind, or there may be very few of them. That’s what happens with digital NFTs and digital art.