A non-fungible token (NFT) is a unique digital identifier that cannot be copied, replaced or shared, which is recorded on the blockchain and used to confirm the ownership and authenticity of an object. Non-fungible tokens cannot be replaced, divided, replaced.
That is why the token system is suitable for fixing the rights to a variety of unique objects – works of art, real estate, intellectual products or things in computer games.
Each entry in the blockchain is called a token. In the blockchain, all tokens are like banknotes of the same denomination, absolutely equal and completely interchangeable. Cryptocurrency money works exactly like this: for example, one bitcoin can be easily replaced by another, and nothing will change.
But Non Fungible Token (NFT) technology works in a fundamentally different way. A non-fungible token is a digital unit that cannot be replaced by another token without changing the value and essence of the object itself.
Like cryptocurrencies, NFTs are created on a blockchain, which acts as a database for recording all transactions. The blockchain ensures the authenticity of non-fungible tokens. Thanks to this system, any user can check for originality, as well as the creation time and history of a particular NFT through the blockchain.
When buying an NFT token, the user acquires a certificate for the product. At the same time, the product itself does not physically move anywhere. It is located on the eternal storage (IPFS). This certificate confirms that the owner of the token is the owner of the original copy of the product. An NFT token is likened to a painting that is legally owned by a gallery, museum, or individual, but can be viewed by the audience in a catalog or at an exhibition.