---

What Is an NFT?

An NFT, a non-fungible token, is a unique token on a blockchain. Regular coins are interchangeable: one bitcoin equals any other bitcoin. Each NFT is distinct, which makes it useful for representing ownership of one specific thing: an artwork, a membership, a game item, a ticket, a name.

How It Actually Works

An NFT is created, or minted, by a smart contract that records a token ID and an owner address on the blockchain. The token usually points to metadata, the image or content, which often lives outside the chain itself. When you buy an NFT, the ownership record updates to your address. What you legally own beyond that record depends entirely on the project's terms. Sometimes it includes rights to the artwork. Often it does not.

Risks and Common Mistakes

• Illiquidity. Unlike coins, an NFT only sells when a specific person wants that specific item. Most collections barely trade. See floor price.
• Fakes. Anyone can mint copies of famous work. Verify collections and contract addresses before buying.
• Dead projects. Most 2021-era collections lost nearly all their value. Buy things you want to own, not things you hope to flip.
• Fractionalized NFTs can become securities. The SEC's 2026 guidance treats normal collectibles as collectibles, but selling profit-shares of one changes the rules. My securities guide explains.

When It Matters

The two marketplaces that matter most are OpenSea for Ethereum and most chains, and Tensor for Solana. I have plain reviews of both: OpenSea and Tensor. The broader context lives on my NFTs and DeFi page.

Related Terms

• NFT marketplace
• Floor price

---

Glossary · Resource Library · Return to Official Home Page

---

Copyright © 2026 Crypto Guidance Inc.