The year 2021 marked a breakthrough for NFTs as they exploded into mainstream awareness. Beyond attracting celebrities and public figures, major corporations like Tencent, NetEase, and Alibaba also entered the space. From artworks and collectibles to intellectual property, music, and video games—almost any digital or physical asset can be tokenized as an NFT. With the recent rise of NFT-based games and metaverse platforms, NFTs are experiencing another significant surge in popularity and adoption.
According to data from NonFungible, the NFT market reached $823 million in sales within a recent 30-day period.
But what exactly are NFTs, and how can everyday users participate in this growing ecosystem?
Understanding NFTs
NFT stands for Non-Fungible Token. Unlike cryptocurrencies such as Bitcoin or Ethereum, which are fungible and interchangeable, NFTs are unique, indivisible, and cannot be exchanged on a one-to-one basis.
This concept becomes clearer when compared to fungible tokens (FTs). FTs are identical and interchangeable—for example, one Bitcoin is the same as any other Bitcoin. NFTs, on the other hand, are one-of-a-kind, like a unique digital trading card, a specific piece of digital art, or a tokenized event ticket.
Because each NFT is distinct, it can be used to represent ownership of a unique digital or physical asset. This ownership is recorded on a blockchain, making it transparent, verifiable, and independent of any central authority. Digital art, in-game items, and collectibles can be "minted" as NFTs, ensuring their authenticity and scarcity.
The history of NFTs dates back to 2017 with the launch of CryptoPunks—a collection of 10,000 uniquely generated 24x24 pixel art characters. Shortly after, CryptoKitties, a blockchain-based game where users collect and breed digital cats, gained massive popularity and brought NFTs into the public eye.
Since then, NFTs have expanded into various domains including digital art, collectibles, domain names, virtual real estate, and identity verification. Art, decentralized finance (DeFi), and gaming have been the primary drivers behind recent NFT booms.
How to Participate in the NFT Ecosystem
There are several ways for beginners to engage with NFTs. The three most common methods are: purchasing NFTs directly, investing in NFT-related tokens, or creating and minting your own NFTs.
Purchasing NFT Assets
One straightforward approach is to buy NFTs—whether digital art, collectibles, in-game assets, or virtual land—on primary or secondary markets.
Top NFT projects are often centered around digital collectibles, gaming, and virtual real estate. You can participate in primary market auctions or browse secondary marketplaces like OpenSea. To get started, you’ll need a cryptocurrency wallet and the native tokens of the blockchain on which the NFT is built.
It's worth noting that investing in individual NFTs requires a good eye for value, an understanding of cultural trends, and the ability to assess factors like scarcity, project foundation, and historical significance. This route is often more appealing to those interested in collecting and community engagement.
👉 Explore popular NFT marketplaces
Investing in NFT-Related Tokens
Another approach is to invest in utility or governance tokens associated with NFT platforms and projects. These are not NFTs themselves—instead, they are fungible tokens used within NFT ecosystems, or native tokens of blockchains that support NFT transactions.
There are over 100 NFT-related tokens available today, with the top 100 boasting a combined market capitalization in the billions. Many trading platforms offer dedicated sections for these tokens.
Creating Your Own NFTs
If you're interested in creating rather than just collecting, you can mint your own NFTs. Platforms like OpenSea and Rarible allow users to upload digital files—such as JPG, PNG, GIF, MP3, or GLB files—and turn them into tradable NFTs.
The process typically involves connecting your wallet, uploading your file, and configuring properties like edition size, description, and royalty fees. This allows creators to maintain ownership and earn royalties from future sales.
Frequently Asked Questions
What does NFT stand for?
NFT stands for Non-Fungible Token. It represents a unique digital item stored on a blockchain, which certifies ownership and authenticity.
How do I store my NFTs?
NFTs are held in cryptocurrency wallets that support the standard they are built on (e.g., ERC-721 or ERC-1155 on Ethereum). The wallet does not store the digital file itself, but rather the token that points to it and proves ownership.
Can anyone create an NFT?
Yes. Most NFT marketplaces allow users to mint NFTs by uploading a digital file and paying a minting fee. However, creators should ensure they own the intellectual property rights to the content.
Are NFTs bad for the environment?
This is a common concern due to the energy usage of some blockchains. However, many newer platforms use energy-efficient consensus mechanisms like proof-of-stake, which minimize environmental impact.
What gives NFTs value?
Value is derived from factors such as scarcity, utility, creator reputation, community interest, and cultural relevance. Like physical art or collectibles, value is largely determined by what others are willing to pay.
Can NFTs be copied or forged?
While the digital file an NFT points to can be copied, the token itself—which represents ownership—is unique and cannot be replicated. This is guaranteed by the underlying blockchain technology.