NFTs: Digital Ownership

Tokens with individual identifiers

An NFT contract records ownership of individually identified tokens. A token can refer to an image, ticket, membership, or another item, but owning it does not automatically transfer copyright or legal ownership of that item.

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	Verifiable token ownership; royalties depend on marketplace support	Foundation, SuperRare
Event tickets	Tickets can be checked against the issuing contract	Ticketing contracts
Domain names	Own a .eth name as an NFT	Ethereum Name Service (ENS)
Game items	Transfer items where the game and marketplace support them	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.