During their peak, the three biggest NFT platforms were Ethereum, Solana and Cardano. The NFT market has also been compared to an economic bubble or a Ponzi scheme.

NFTs have been used as speculative investments and they have drawn criticism for the energy cost and carbon footprint associated with some types of blockchain, as well as their use in art scams. The trading of NFTs in 2021 increased to $17 billion over just $82 million in the previous year. An NFT does not restrict the sharing or copying of its associated digital file and does not prevent the creation of NFTs that reference identical files. The ownership of an NFT as defined by the blockchain has no inherent legal meaning and does not necessarily grant copyright, intellectual property rights, or other legal rights over its associated digital file.

Proponents claim that NFTs provide a public certificate of authenticity or proof of ownership, but the legal rights conveyed by an NFT can be uncertain. Because NFTs are uniquely identifiable, they differ from cryptocurrencies, which are fungible. NFTs typically contain references to digital files such as artworks, photos, videos, and audio. NFTs can be created by anybody, and require few or no coding skills to create.

The ownership of an NFT is recorded in the blockchain and can be transferred by the owner, allowing NFTs to be sold and traded. It cannot be copied, substituted, or subdivided. Illustration of a non-fungible token generated by a smart contract (a program designed to automatically execute contract terms)Ī non-fungible token ( NFT) is a unique digital identifier that is recorded on a blockchain, and is used to certify ownership and authenticity.

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