NFTs: Digital Ownership
Beyond the hype
NFTs got famous for $69 million art sales and cartoon apes. Behind the hype, the technology is simple and useful: NFTs let you prove you own a unique digital item on a blockchain.
An NFT is a token with a unique ID. Unlike USDC (where every token is the same), each NFT is one-of-a-kind. The blockchain records who owns it, who created it, and its entire transaction history.
How NFTs work technically
An NFT is just a number (token ID) stored in a smart contract, linked to a wallet address.
The smart contract is a table. Each row has a token ID, an owner address, and a link (URI) to metadata. The metadata (stored off-chain, usually on IPFS) contains the name, description, and image URL.
When you "buy" an NFT, the smart contract changes the owner field from the seller's address to yours. The blockchain records this permanently.
Use cases beyond art
| Use case | How NFTs help | Examples |
|---|---|---|
| Art and collectibles | Provable ownership and royalties | Foundation, SuperRare |
| Event tickets | Cannot be counterfeited, easy to transfer | GET Protocol |
| Domain names | Own a .eth name as an NFT | Ethereum Name Service (ENS) |
| Game items | Trade items across games and markets | Gods Unchained, Axie Infinity |
| Membership passes | Token-gate access to communities | Bored Ape Yacht Club |
| Real-world assets | Represent ownership of physical items | Real estate tokens, luxury goods |
The ERC-1155 standard
ERC-721 creates one token per item. ERC-1155 allows a single contract to manage both fungible and non-fungible tokens. A game studio can use one ERC-1155 contract for both unique swords (non-fungible, each is different) and gold coins (fungible, all identical).
Key takeaways
- NFTs are tokens with unique IDs that prove ownership of a specific item.
- ERC-721 is the standard for unique tokens; ERC-1155 supports both unique and identical tokens.
- Images and metadata are usually stored off-chain (IPFS), not on the blockchain itself.
- Real use cases extend beyond art: tickets, domains, game items, memberships.
Quiz: NFTs: Digital Ownership
1 / 5What makes an NFT 'non-fungible'?