What are NFTs?

Key Takeaways

• NFTs are uniquely identifiable one-of-a-kind tokens on the blockchain that can be bought, sold, and traded via NFT marketplaces.
• NFTs are now being used as collectibles, gaming, art, music, events, ticketing, loyalty programs, and even real estate.
• Phantom helps you navigate the exciting world of NFTs and manage them easily through an intuitive interface.

Since being created in 2015, NFTs offer a unique way to verify ownership and authenticity of digital content and identity. The number of use cases for NFTs continues to grow — collectibles, gaming, art, music, events, ticketing, loyalty programs, and even real estate just to name a few. With multi-million dollar sales and big-name companies adopting the technology, NFTs offer a new and exciting way to provide ownership and scarcity in the digital world.

What are NFTs?

NFTs, or “non-fungible tokens,” are digital assets on the blockchain that are unique, immutable, and cannot be replicated. Each NFT acts as a certificate of ownership of the asset it represents — from digital art to memberships.

The "non-fungible" part is what makes NFTs unique. Let's take a look...

Fungible vs. Non-Fungible

Fungible, in simple words, means replaceable or interchangeable. Every fungible asset can be exchanged with another fungible asset, without any problems. For instance, currency is a fungible asset. Every $10 bill is worth the same as every other $10 bill because its value is the same — it’s fungible. The same is true for cryptocurrencies like Ethereum. 1 ETH = 1 ETH. Commodities (like sugar or gold) and stocks are also considered fungible assets.

A non-fungible asset, on the other hand, is not replaceable by something else of equal value. Imagine a sports card signed by one of your favorite athletes. You can’t replace it with another because a unique feature has been added to it. Similarly, a piece of art like the Mona Lisa is non-fungible because it is unique — and although there might be knock-offs floating around, they cannot replace the original.

What are NFTs used for?

At first glance, it might be easy to assume that NFTs are used primarily for art or as collectibles for profile pictures. And with good reason — collectibles and artwork are major use cases for NFTs. However, the applications for NFTs are growing beyond art.

For instance, real-estate NFTs like Homebase DAO allow you to simplify real estate investing by owning a shares of a property represented as NFTs. Similarly, music NFTs such as Sound.xyz are on the rise — they give fans the ability to support artists directly by collecting limited edition songs, or even own recording rights in some instances.

What are the main types of NFTs?

PFPs and collectibles

From penguins to apes, PFP (profile picture) NFTs are digital collectibles that are commonly used to express one's digital identity on social media. Along with being a social flex, PFP NFTs like Azuki and Kanpai Pandas often provide access to exclusive communities with networking opportunities and other perks.

While PFPs are considered collectibles, there are many types. Collectible NFTs can range from virtual trading cards and original music to digital art pieces, and everything in between.

Art and photography

In a traditionally closed-off and hard-to-access art world, NFTs offer a new way to monetize or acquire digital art. Even museums are experimenting with NFTs by converting famous paintings like Gustav Klimt's "The Kiss" into 10,000 NFTs or Vincent’s Van Gogh’s Starry night.

Apart from art NFTs, Photography NFTs are also gaining popularity. Just like you buy the license of a photo from stock sites, this NFT grants you exclusive rights and ownership of the photograph.

Gaming

NFTs and gaming are an ideal combination. In-game accessories such as Fortnite skins are a billion-dollar industry. Gaming NFTs allow users to actually own some of the assets they earn through playing games, which they can then sell, lend, or trade on an open market.

Gaming NFTs can range from metaverse land, such as land in Sandbox or Decentraland, or in-game avatars and items, like in Planet Mojo or Mini Royale: Nations. Holders of Land NFTs own the specific property in that metaverse that they can lend out to other players. Similarly, in-game characters can have items like skins as NFTs, which they can trade with other players.

How do I buy, sell, and trade NFTs?

You need three things to buy, sell, and trade NFTs: an NFT marketplace, a wallet to connect to that marketplace, and the blockchain’s native token for fees. If that sounds complex, don’t worry. If you have Phantom installed you’re already halfway there. If not, download Phantom to get started.

Marketplaces

As the name suggests, an NFT marketplace is a platform where you can buy and sell digital assets like NFTs. NFT marketplaces come in a lot of shapes and sizes — each built to suit different needs.

For instance, Opensea, a popular NFT marketplace with a wide range of NFTs, is best suited for beginners who are looking to get their feet wet. Similarly, Blur.io, a newer marketplace, has powerful tools built for active NFT traders.

There are also marketplaces built for certain types of NFTs and creators. Like previously mentioned sound.xyz for music, or Foundation for curated pieces of art, open editions, and 1-of-1s.

Finally, there are marketplaces dedicated to NFTs on specific blockchains. For example, Tensor for Solana NFTs and Dew for Polygon NFTs.

To learn more about NFT marketplaces, listen to our interview with Alex Salnikov, Co-Founder or Rarible, another top NFT marketplace worth exploring.

Manage your NFTs with Phantom

Phantom is built for NFTs. We're here to help you take your first step into exploring the world of NFTs. To start, here's what you can do:

• Download Phantom
• Buy crypto
• Visit the top marketplaces on Solana and Ethereum to find your favorite NFTs and start building your collection!

Collectibles tab

Once you buy NFTs, you can view and manage them in the collectibles tab in your Phantom wallet. By default, your NFTs are organized into collections, giving you a birds-eye view of everything you’ve collected. With Phantom, you can easily search through your NFTs, pin the ones you love, and hide the ones you don't.