NFT
Non-Fungible Token — a unique digital asset whose ownership is recorded on a blockchain, representing digital art, collectibles, or other unique items.
Example
“Bored Ape NFTs sold for hundreds of thousands of dollars during the 2021 boom.”
Memory Tip
NFT = Not Fungible (not interchangeable). Unlike Bitcoin, each NFT is unique.
Why It Matters
NFTs matter for personal finance because they represent a new asset class that can appreciate or depreciate significantly in value. Understanding NFTs helps individuals make informed decisions about whether to invest in digital collectibles and how to evaluate the risks of speculative digital assets.
Common Misconception
Many people assume that owning an NFT means they own the underlying digital file or have exclusive rights to it. In reality, owning an NFT typically only means you own a certificate of ownership recorded on the blockchain, while the actual file may be freely copyable and the creator often retains certain intellectual property rights.
In Practice
A person purchased an NFT artwork for 5 ETH (approximately 10,000 dollars) in January 2022 expecting it to increase in value. By December 2022, the same NFT sold for only 0.5 ETH (approximately 600 dollars) due to declining market interest, illustrating how NFT values can be highly volatile and speculative compared to traditional investments.
Etymology
NON-FUNGIBLE (unique, not interchangeable) + TOKEN (digital representation). Each NFT is one-of-a-kind.
Common Misspellings
Buy Bitcoin & crypto with low fees
Related Terms
More in cryptocurrency
Other cryptocurrency terms you should know
See Also
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.