It’s hard to ignore NFTs after the massive hype they experienced during the 2021 bull run. However, in 2025, many people still wonder what NFTs are and why they generated such excitement, which has now partially faded.
In this guide, we explain everything you need to know about NFTs, how they work, and the opportunities they still offer today.
The real utility of an NFT is to establish ownership of digital assets.
NFTs allow us to tokenize digital items such as artworks, collectibles, and even real estate. They can have only one official owner at a time, and ownership is recorded on the blockchain. No one can alter this ownership record or simply copy and paste an NFT.
An NFT (Non-Fungible Token) is a digital token that represents a virtual asset. Hosted on a blockchain, each NFT has a unique serial number, making it traceable and irreplaceable.
NFT stands for Non-Fungible Token, meaning a token that cannot be replaced or exchanged equivalently.
“Non-fungible” is an economic term that means “not interchangeable.” Something is non-fungible when it has a unique identity.
For example, money is fungible. A $1 bill or 1 ETH can be exchanged for another $1 bill or 1 ETH without any difference in value.
However, a desk chair is non-fungible. Even if it’s an IKEA chair that exists elsewhere, my chair is unique because of its specific usage, condition, and ownership history.
Fungible items can be replaced because they are defined by their value, while non-fungible items are defined by their individual characteristics.
Since NFTs are unique digital assets, blockchain technology ensures their authenticity and uniqueness, preventing duplication or unauthorized modifications.
NFTs and Ethereum help solve some of the fundamental issues of today’s digital world. In the current internet landscape, there is no true scarcity or uniqueness—anything can be copied and pasted, making it impossible to determine the original version of an image or digital asset.
NFTs address this problem by bringing authenticity, uniqueness, and rarity—qualities found in physical assets—to digital objects.
As the world becomes increasingly digital, with the rise of metaverses and virtual assets, the need for a system that ensures true ownership of digital assets has grown. NFTs provide this solution.
From a legal and intellectual property standpoint, NFTs offer significant benefits to artists. By storing their work on the blockchain, artists can:
Unlike traditional art markets, where an artist only profits from the initial sale, blockchain technology allows for ongoing revenue generation through smart contracts.
Beyond their artistic and technological benefits, NFTs have become an investment opportunity.
Over the past few years, NFTs have dominated headlines, with some tokens selling for staggering prices. Collections like CryptoPunks and Bored Ape Yacht Club (BAYC) have drawn significant attention, turning digital art into a high-value market.
Just like cryptocurrencies, identifying promising NFTs can be a lucrative opportunity for those who anticipate which assets may increase in value over time.
Royalties refer to the author’s rights that creators receive when their work is used, resold, or licensed. In the music industry, for example, artists earn royalties whenever their songs are played on the radio. However, tracking every instance of a song being played in stores, bars, or events is complex.
Blockchain technology provides a concrete solution through smart contracts.
These self-executing contracts automatically enforce royalty payments based on predefined conditions.
With NFT royalties, creators can:
Thanks to smart contracts, artists no longer need intermediaries to claim their royalties. Every time an NFT is traded, royalties are instantly transferred to the original creator, ensuring sustainable earnings over time.
NFTs operate directly on a blockchain—the fundamental technology that connects cryptocurrencies, NFTs, metaverses, and digital assets.
A blockchain is essentially a large decentralized ledger where various types of information are recorded. In the case of an NFT, this ledger stores details such as:
The key advantage of blockchain technology—and the reason behind its success—is that it is decentralized. This means that:
Before any data is added to the blockchain, it undergoes multiple verifications, making the system highly secure and tamper-proof.
Because of this, NFTs are provably unique, and their authenticity, ownership, and transaction history are securely recorded on the blockchain.
The term “mining” is commonly used in discussions about NFTs and cryptocurrencies, but the process for NFTs differs significantly from traditional crypto mining.
In the context of NFTs, minting refers to the process of recording a digital asset on the blockchain. This process is what officially turns a digital item into an NFT, making it sellable, tradable, and verifiable.
Minting an NFT requires a one-time transaction to register the asset on the blockchain. This process comes with a fee known as gas fees, which are often quite high.
In reality, most artists do not pay gas fees upfront when listing their NFTs on a marketplace. Instead, they use a process called lazy minting, where the first buyer covers the gas fees when purchasing the NFT.
Until an NFT is purchased or auctioned, it remains off-chain and is only stored on the marketplace.
However, if a seller chooses to list their NFT at a fixed price, they must pay gas fees upfront. These fees cover the blockchain integration process, ensuring that the NFT is fully registered and immediately sellable.
The minting process guarantees security and transparency, preventing counterfeiting while proving ownership and authenticity of the NFT.
NFTs can exist in multiple forms, each offering unique digital ownership and artistic expression.
The most well-known format is images, as they dominate the NFT space today. These images are typically in JPG, PNG, or even GIF format for animated NFTs.
However, NFTs are not limited to static images. They can also take the form of:
Most NFT projects are released as collections, consisting of a limited number of tokens. While the base design may be the same across a collection, each NFT has unique attributes that set it apart.
Within these collections, certain NFTs are rarer than others, depending on their specific characteristics. The rarity factor plays a major role in determining the value of an NFT.
Some collections have become legendary, skyrocketing in price and making headlines. Examples include:
This new form of digital art is primarily bought and sold on NFT marketplaces, with OpenSea being the largest and most well-known platform for NFT trading.
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