NFTs are unique digital identifiers recorded on a blockchain. Unlike cryptocurrencies where every coin is identical, every NFT is distinct and cannot be replaced with something else.
Standards of Uniqueness
NFTs aren't just images; they are specific Smart Contract Standards. On Ethereum, the most common is ERC-721, which ensures that every token ID is unique.
While a standard cryptocurrency (ERC-20) is like a pile of identical gold coins, an ERC-721 token is like a signed original painting. Even if a copy looks the same, the 'provenance'—the history of who owned it and where it came from—is technically embedded in the blockchain.
1-of-1 Assets
The gold standard for unique art and collectibles. Each token is a distinct entity with its own metadata and ownership history.
Multi-Token Standard
Used for gaming and large collections. It allows a single contract to manage multiple types of items—both unique (like a sword) and fungible (like gold coins).
Metadata & IPFS: Where is the Art?
An NFT on the blockchain usually points to a JSON Metadata file rather than storing the actual image data (which would be too expensive).
To ensure the image doesn't disappear if a website goes down, many NFTs use IPFS (InterPlanetary File System). Instead of a link like 'website.com/image.jpg', it uses a 'Content Identifier' based on the file's hash. As long as at least one computer in the world is hosting that file, the NFT will always point to the exact same artwork.