What are non-fungible tokens (NFTs)?
Non-fungible tokens aren't actual cryptocurrencies in the same sense as Bitcoin (CRYPTO:BTC). Cryptocurrencies utilize blockchain for its ability to track financial transactions between parties and were designed as a type of digital currency for use on the internet and in a digital-first world.
NFTs are also built on a blockchain but instead are used to guarantee ownership of an asset. Think of it as a certificate such as an auto or real estate title stating the legal owner of a car or home, except that an NFT is proof of ownership in digital form. Most NFTs are based on the Ethereum (CRYPTO:ETH) blockchain network.
An NFT is a unique digital asset that is not directly replaceable with another digital asset (thus the name "non-fungible"). Many physical assets are also non-fungible. Real estate, for example, is non-fungible since each piece of property is unique from others.
A "fungible" token, by contrast, is one that is replaceable with another one identical to it. Ether is the fungible token that trades on the Ethereum network, meaning one Ether is identical to another. The same goes for Bitcoin. One Bitcoin can be exchanged for another Bitcoin because they have the same value. Physical currencies work this way, too. One physical dollar bill is the same as another dollar bill, and thus each are "fungible." But each NFT is unique; there isn't another one exactly like it out there, so they are non-fungible -- or unable to exactly replace another.
Code is written into this digital token and recorded using the blockchain network it's based on (again, usually on Ethereum) to prove a list of historical ownership and the current owner of a unique digital asset. An NFT can represent any digital creation -- art, music, videos, writing, etc.