What Are NFTs?

What you'll learn

• Introduction to NFTs
• The Problem of Digital Ownership
• A Real History — From Quantum to CryptoKitties
• The 2021 Boom and the 2022-2023 Winter
• The Standards: ERC-721, ERC-1155, ERC-721A, ERC-6551
• What Do You Actually Own?
• A Useful Analogy: Authenticated Collectibles

Key terms

NFT (Non-Fungible Token)

A unique digital token on a blockchain that represents ownership of a specific digital or physical item. Unlike cryptocurrencies, each NFT has its own identifier and is not interchangeable with another token of the same type.

Fungible

Interchangeable and identical in value. A dollar bill is fungible because it can be swapped for any other dollar bill without any meaningful difference. Cryptocurrencies like Bitcoin and ETH are fungible.

ERC-721

The foundational Ethereum non-fungible token standard, finalized in June 2018 (proposed by Dieter Shirley and others). Each token under this standard has a unique identifier and is owned by exactly one wallet.

ERC-1155

The Ethereum Multi Token Standard, finalized in June 2019 by Witek Radomski of Enjin. A single contract can manage both fungible and non-fungible tokens and supports efficient batch transfers — popular in gaming.

ERC-721A

A popular open-source ERC-721 implementation released by Chiru Labs (Azuki) in January 2022. Optimizes gas costs for batch minting, letting a buyer mint many NFTs in a single transaction inexpensively.

ERC-6551 (Token Bound Accounts)

A standard proposed in February 2023 that gives every NFT its own smart contract wallet, so an NFT can hold tokens, hold other NFTs, and sign transactions on its own. Useful for game characters and on-chain identity.

Metadata

Structured information attached to an NFT that describes the asset — typically a name, description, list of attributes, and a URL pointing to the image or media file. Stored either on-chain or off-chain.

IPFS

InterPlanetary File System, a peer-to-peer protocol for content-addressed file storage. Files are referenced by their content hash, not their location, making links durable as long as at least one node "pins" the file.

Arweave

A blockchain-based storage network designed for permanent storage. Users pay a one-time fee that endows ongoing storage for at least 200 years. Used by some NFT projects to store artwork permanently.

Provenance

The complete documented history of ownership of an item. Blockchains automatically maintain tamper-resistant provenance for every NFT transfer.

CC0

"Creative Commons Zero" — a license that effectively places work in the public domain. CC0 NFT projects (Nouns, Cryptoadz, Mfers) waive all rights so anyone can use the artwork for anything.

On-chain art

Artwork whose visual data is stored entirely inside the smart contract itself, rather than on an external server. Examples include Autoglyphs, Nouns, and the post-2021 CryptoPunks images.