What is an NFT? Non-fungible tokens explained

What is an NFT?

An NFT (non-fungible token) is a type of digital asset that represents ownership of a unique item - usually digital artwork, music, collectibles, or virtual property. Unlike a standard digital file, which can be copied or shared freely, an NFT is one-of-a-kind and traceable, as it’s secured on a blockchain.

Its ‘non-fungible’ nature basically means that the asset is not interchangeable with another asset of the same type. This is different from cryptocurrencies like Bitcoin, fiat currencies like the US Dollar or even metals like gold, all of which are fungible. 

For example, you would be perfectly happy to exchange one Bitcoin for another, but you can't replace one NFT for another, because no two NFTs share identical values or characteristics.

NFTs have three core characteristics that make them distinct:

• Uniqueness — every NFT is different and carries unique metadata, such as the creator’s details or a link to the digital content it represents
• Indivisibility — NFTs cannot be divided into smaller parts like cryptocurrencies (for example, one BTC is 100 million Satoshis). You either own the whole token or none of it
• Blockchain-based — NFTs exist on decentralized networks including Ethereum or Cronos, which record every transaction and ensure the authenticity, provenance, and ownership history of each token

These features make NFTs ideal for certifying digital ownership and enabling the trade of rare or collectible assets online.

Sign up on Crypto.com to start exploring NFTs.

How do NFTs (non-fungible tokens) work?

NFTs work using blockchains, which are decentralized digital ledgers that record transactions securely and transparently. Each NFT is stored on a blockchain (commonly Ethereum or Cronos), containing metadata and unique identifiers that distinguish it from every other NFT. 

This ensures that the ownership and transaction history of an NFT can be verified by anyone, making forgery or duplication difficult.

A key aspect of NFTs is smart contracts. These are self-executing pieces of code that live on the blockchain, which define the rules and properties of each NFT, including ownership rights, royalties for creators, and transferability. When someone buys or sells an NFT, the smart contract automatically updates the ownership record on the blockchain without the need for intermediaries. 

This element is what makes NFT transactions efficient, because there is no need to trust your counterparty or involve contract mediators.

Creating an NFT is known as minting. The minting process involves uploading a digital file (such as a piece of artwork, video, or music) to an NFT platform, which then generates a token linked to that file. The token’s information, including the creator’s name, description, and a secure link to the content, is then encoded onto the blockchain via a smart contract. 

Once minted, the NFT becomes a permanent part of the blockchain, where it can be bought, sold, or traded on compatible marketplaces. NFTs are typically stored in digital wallets that support NFT standards (like ERC-721 or ERC-1155). These wallets allow users to view, manage, and transfer their NFTs securely.

What is the purpose of NFTs?

NFTs are designed to establish ownership of a digital asset in a way that’s verifiable, transparent, and secure. Before NFTs, digital files (from images to videos and music) could be copied endlessly without any way to prove who owned the original version. NFTs solve this issue by assigning ownership rights to the original assets.

Another key purpose of NFTs is to create scarcity in the digital world. Each NFT is non-fungible, meaning it’s completely unique and cannot be replaced with another. This scarcity is encoded directly into the token's metadata, which can make it valuable to collectors and creators. For example, a digital artist could decide to mint only 10 versions of a rare artwork, and buyers will know for certain they own one of just a few originals.

It's also worth noting that every transaction involving an NFT is recorded on the blockchain, creating a permanent, almost tamper-proof history of who created it, who has owned it, and when it was transferred. This helps to reduce fraud, as anyone can verify an NFT’s origin and ownership record whenever they choose.

Benefits of NFTs

NFTs sport a wide range of advantages, stemming from the core features of blockchain technology and smart contracts: 

1. Digital ownership

NFTs provide a secure and verifiable way to claim ownership of digital assets. Whether it’s artwork, music, virtual land, or collectibles, NFTs ensure that users truly ‘own’ their digital items. This ownership is recorded on the blockchain, meaning it cannot easily be tampered with.

2. Transparency

Every NFT transaction is logged on a blockchain, which acts as a transparent public ledger. This means anyone can trace the ownership history of an NFT, view its metadata, and verify its authenticity. 

3. Investment opportunities

NFTs have opened up new investment opportunities in the digital world. Rare and desirable NFTs can appreciate in value over time, while marketplaces also allow for fractional ownership, alongside staking and lending, using your NFTs as collateral.

4. Royalty potential

Smart contracts let creators embed automatic royalty terms into their NFTs. This means that every time the NFT is resold on a secondary market, the original creator receives a percentage of the sale. This revenue model empowers artists, musicians, and developers to earn recurring income and maintain control over their digital work.

NFT (non-fungible token) examples

NFTs come in many forms. Some of the most well-known NFT art collections include CryptoPunks, Bored Ape Yacht Club, and NBA Top Shot.

CryptoPunks were among the first major NFT projects, consisting of 10,000 unique 24x24 pixel art characters minted on the Ethereum blockchain. They quickly became digital status symbols and are considered pioneers of NFT art culture. Bored Ape Yacht Club, another popular collection, features cartoon ape avatars with different traits. 

These NFTs also act as membership passes to exclusive events and online communities. For example, NBA Top Shot offers officially licensed basketball highlight clips as NFTs, allowing fans to own iconic in-game moments.

NFTs can be grouped into several main categories:

• Art – digital artworks sold as NFTs allow artists to monetize their creations and prove authenticity, based on platforms like Foundation and SuperRare 
• Collectibles – projects like CryptoPunks and NBA Top Shot fall into this category, offering rare, tradable items with unique traits 
• Gaming – NFTs are used in games like Axie Infinity and Gods Unchained to represent in-game characters, weapons, or land, which players can buy, sell, and trade
• Virtual real estate – platforms like Decentraland and The Sandbox let users buy, sell, and build on virtual land parcels in their metaverses, each represented as a unique NFT

Arguably, use cases are in practice only limited by your creativity.

How to buy NFTs

Buying NFTs is easier than ever, especially with Crypto.com, as we prioritize security and simplicity. Here’s how to easily buy, sell, and store NFTs securely in the Crypto.com app:

1. Create a Crypto.com account – sign up to Crypto.com and complete the identity verification process (KYC) and anti-money laundering (AML) checks to access full marketplace features.
2. Set up a crypto wallet – use the built-in Crypto.com wallet or connect your own compatible wallet. This wallet will store your NFTs and allow you to transact.
3. Fund your wallet – buy or deposit whichever cryptocurrency the blockchain your desired NFT is based on and send it to your wallet. You can purchase crypto directly through Crypto.com using a credit card, bank transfer, or crypto deposit. There may be fees for both deposits and purchases depending on the method used.
4. Browse the NFT marketplace – visit the Crypto.com NFT Marketplace and explore thousands of NFTs across categories like art, music, gaming, and sports. 
5. Choose an NFT and click ‘Buy’ – when you find an NFT you want, click on it to view details, including creator, ownership history, and price. Click ‘Buy Now’ to proceed.
6. Confirm the purchase – review the transaction, including any gas fees (if applicable), and confirm your purchase. Your NFT will be delivered to your linked wallet.

Crypto.com’s platform is designed with security and ease of use in mind. With multi-layer authentication and a streamlined buying process, it’s one of the simplest ways to enter the NFT space.

How to sell NFTs

Selling NFTs is also a straightforward process with Crypto.com. Here’s how to list and sell your NFTs:

1. Log in to your Crypto.com account – visit Crypto.com/NFT and sign in with your verified account.
2. Connect your NFT wallet – ensure your NFT is stored in a wallet connected to Crypto.com (either the built-in Crypto.com wallet or another compatible wallet linked to your account).
3. Navigate to ‘My NFTs’ – go to your profile and click on ‘My NFTs’ to view all the NFTs you own that are eligible for resale.
4. Select the NFT you want to sell – choose the NFT you wish to list for sale, click on the asset to view its details, then select ‘Sell’.
5. Set your sale asking price – enter the sale price (in a supported cryptocurrency), choose between a fixed price sale or an auction, and set any optional parameters such as listing duration. As with any auction, realistic pricing makes the chances of a sale more likely.
6. Confirm and list your NFT – review all the details carefully, then click ‘List for Sale’. The listing will be submitted to the Crypto.com NFT Marketplace and made visible to potential buyers.
7. Track offers and sales – you’ll receive notifications if someone places a bid or buys your NFT. Once sold, funds will be transferred securely to your wallet.

NFTs and crypto: What's the relationship?

NFTs and cryptocurrencies are closely connected through blockchain technology. Most NFTs are created and traded on blockchain networks like Ethereum, which pioneered the development of NFTs using standards such as ERC-721 and ERC-1155. Other blockchains, including Cronos, also support NFTs, offering different features (for example, lower fees or faster transactions).

Cryptocurrencies play a vital role in NFT transactions. When buying or selling an NFT, you usually pay with the blockchain’s native cryptocurrency - for example, Ether on Ethereum or Cronos on the Cronos network. These cryptocurrencies are used to pay for the NFT itself but critically, also for any associated transaction (gas) fees, which cover the cost of processing and recording the transaction on the blockchain.

Because NFTs and cryptocurrencies share the same underlying technology, owning cryptocurrency is a requirement of participating in the NFT marketplace. 

History of NFTs

NFTs can be traced back to 2014 with the creation of Quantum by artist Kevin McCoy on the Namecoin blockchain. NFT adoption continued to grow with the launch of the Ethereum blockchain in 2015, because its programmable smart contracts made NFTs much more accessible, laying the foundation for their widespread adoption.

The NFT space began gaining real traction in 2017 with the release of CryptoPunks by Larva Labs and CryptoKitties, a viral blockchain-based game that allowed users to breed and trade digital cats. NFT marketplaces such as OpenSea and Rarible emerged between 2018 and 2019, providing platforms for users to buy and sell NFTs with ease. 

The wider NFT market experienced explosive growth during the pandemic years as high-profile artists, celebrities, and global brands entered the space. One of the most famous moments was digital artist Beeple's sale of an NFT for $69 million at Christie’s auction, which solidified NFTs’ position in the traditional art world. 

In 2025, the market is still maturing, with a shift toward NFTs with utility, including virtual real estate, gaming assets, and tokens tied to real-world benefits. 

You can browse popular NFT collections and digital art.

Can I create my own NFT?

Anyone can create their own NFT by following a process called minting, which involves turning a digital file – like art, music, or video - into a unique token on a blockchain. Minting registers your digital asset on the blockchain, proving your ownership and making it available for sale or trade.

The minting process usually starts by selecting a platform that supports NFT creation. Popular platforms including Crypto.com, OpenSea, Rarible, and Foundation provide easy-to-use tools for minting NFTs without requiring significant technical knowledge. On Crypto.com, for example, users can upload their digital files, add details like title, description, and royalties, then mint their NFT directly on supported blockchains such as Ethereum or Cronos.

Once minted, your NFT is stored in your digital wallet, where you can choose to keep it, list it for sale on a marketplace, or transfer it to others. Minting fees may apply depending on the blockchain’s current activity, so it’s a good idea to check estimated costs before proceeding.

Creating NFTs opens opportunities for artists, musicians, writers, and creators worldwide to monetize their work, reach new audiences and maintain control over their creations. 

If you want to create with us, simply head to Crypto.com/NFT and click ‘Create.’ Not everybody is approved as a creator on our platform, and we may ask for concrete examples of your past experience, as well as the types of NFTs you wish to create on our platform. 

If approved, you can select any of Ethereum, Polygon, Cronos, and Cronos POS Chains to mint your NFTs, up to a limit of 50 per week.

Are NFTs profitable?

NFTs can be profitable, but their success depends on several factors. The value of an NFT is largely driven by rarity, demand, creator reputation, and the overall popularity of the NFT category — such as art, collectibles, or gaming assets. 

Just like physical creations, limited edition NFTs or those created by well-known artists tend to command higher prices. Additionally, NFTs tied to strong communities or projects with ongoing development and utility can increase in value over time.

However, profitability in NFTs is not guaranteed. The NFT market is highly speculative and can be volatile, with prices fluctuating dramatically. Some NFTs may see rapid appreciation, while others may lose value or struggle to sell. 

In addition, because NFTs exist as digital assets stored on blockchains, you are exposed to technical risks such as hacking or losing wallet access. There’s also the market risk of illiquidity (a lack of buyers), alongside regulatory uncertainty.

Broken links are also a risk because the image or data is often stored off-chain on third-party servers, not directly on the blockchain. When these off-chain servers fail or are shut down, the NFT's associated media can become inaccessible.

On the plus side, NFT benefits go beyond simple resale value. Creators can earn royalties on secondary sales, and investors can benefit from participating in emerging virtual economies, gaming ecosystems, and collectible markets.

Get started today and be part of the digital collectibles revolution.

Fungible vs non-fungible assets: What's the difference?

Fungible and non-fungible assets differ in their interchangeability. Fungible assets are identical and can be exchanged on a one-to-one basis without any difference in value. For example, one Bitcoin is always equal in value to another Bitcoin, and a $10 bill holds the same value as another $10 bill. 

These assets are uniform and divisible.

Non-fungible assets, on the other hand, are unique and cannot be exchanged on a like-for-like basis because each has distinct characteristics or value. NFTs are non-fungible assets as they represent ownership of one-of-a-kind digital items like artwork, music, or collectibles. 

No two NFTs are exactly alike, which makes each irreplaceable.

For clarity, cryptocurrencies like Bitcoin or Ethereum are fungible because each unit is the same as another. Meanwhile, a CryptoPunk NFT or a digital collectible card from a game is non-fungible because each has unique traits, provenance, and value. 

NFT outlook

NFTs are now evolving beyond digital art and collectibles into sectors like gaming, virtual real estate, and tokenization of physical assets. This expansion is being made possible by advancements in blockchain technology, such as Layer-2 solutions that enhance scalability and reduce transaction costs. 

In addition, the integration of NFTs with decentralized finance (DeFi) platforms allows for innovative financial products, including NFT-backed loans and fractional ownership, democratizing access to high-value assets.

The NFT market is experiencing strong growth, with Technavio projections estimating a compound annual growth rate of 30.3% between 2025 and 2029. Key trends shaping this trajectory include:

• Eco-friendly initiatives – the adoption of energy-efficient blockchains like Tezos and Flow is addressing environmental concerns, attracting ESG investors
• Enhanced interoperability – efforts to improve cross-platform compatibility is better enabling the movement of NFTs across different blockchains, expanding liquidity
• AI integration – artificial intelligence is being deployed to create dynamic and personalized NFTs, improving user engagement 
• Institutional adoption – increased involvement from established financial institutions and luxury brands is signaling a shift towards the integration of NFTs into traditional markets 

Important Information: This is informational content sponsored by Crypto.com and should not be considered as investment advice. Trading cryptocurrencies carries risks, such as price volatility and market risks. Before deciding to trade cryptocurrencies, consider your risk appetite.