Non-Fungible Token (NFT): Unique Digital Assets on a Blockchain

An NFT, or non-fungible token, is a token that is distinct from other tokens and not interchangeable with them. A token is a unit issued on an existing blockchain through a smart contract. Non-fungible means that the contract gives each token a number, called a token ID, that tells it apart from the other tokens.

A blockchain is the shared record of transactions, kept in order as blocks. A block is a batch of transactions that is added to the record together. A transaction is a request that a user sends to a blockchain, such as a request to move a token.

An address is an identifier on a blockchain for a user or for a smart contract. A smart contract is a program stored on a blockchain at an address, and it runs when a transaction asks it to. A token contract is a smart contract that creates and tracks tokens.

In the title, “unique” means distinct from the other tokens of the same token contract, and “digital assets” is a label for the tokens this entry describes. Neither word says anything about the legal or financial status of a token.

Fungible vs. Non-Fungible: What Is the Difference?

The difference is interchangeability. A fungible token is a token whose units are interchangeable, so one unit is the same as another. Each NFT, by contrast, has a token ID that distinguishes it inside its contract, so swapping two NFTs is not a swap of like for like.

What Does a Blockchain Record for an NFT?

For each NFT, a token contract records a token ID and the address that controls the token. The address of the token contract and the token ID together identify one token on that blockchain. A token contract can also link a token to a digital file, such as a picture, a sound recording, a video, or a document.

A token standard is a published set of rules for how a token contract behaves. ERC-721 is a token standard for NFTs on Ethereum, and it defines how to ask which address controls a token and how to request a transfer. “Owner” is the standard’s word for the address that controls a token, and the standard gives no legal definition of the word.

Where Are NFT Metadata and Media Files Stored?

ERC-721 does not say where the metadata file or the media file is stored. On-chain storage means that data is stored in the blockchain itself, and off-chain storage means that data is stored outside it. The standard’s rationale, which is the part that explains the authors’ choices, calls it too expensive to put a token’s full metadata on the blockchain.

NFT metadata is data that describes a token, such as a name and a description. A token contract can include an optional metadata part, and it then returns a link, called a token URI, for each token ID. Because the part is optional, a token can have no token URI. A URI is a web-style link that locates a file.

The token URI may point to a metadata file in JSON, a text format for structured data. The file may follow a schema, which is a layout of fields, with a name, a description, and an image. The image field holds a separate link, which leads to the image itself.

How Is an NFT Created and Moved?

Minting is the creation of a new token. When a token contract mints a token, it records a new token ID and the address that controls the token.

A transfer is a transaction that asks the token contract to change which address controls a token ID. The token ID stays the same for the life of the contract. The token contract usually also records a transfer event, which is a notice that the address controlling a token has changed.

By the rules of a token standard for NFTs, the address that controls a token can request a transfer, and it can allow another address to request transfers as well. A token contract can add further conditions, such as pausing transfers.

A transaction that requests a transfer is signed with a private key, which is a secret number that only its holder is meant to know. The signature is a piece of data made from the transaction and the private key, and it lets others check that the holder of the key sent the request. For an address that a user controls, whoever can sign with that private key can make the request.

What Does a Token’s Record Show, and What Does It Leave Out?

A token’s record shows which address the token contract lists for a token ID, and that address is the one that controls the token. Transfer events usually record each change of that address.

As of October 2026, ERC-721 covers how a token contract behaves and does not address who made a file or what rights a holder has. This is a description of the standard and not a statement about any holder’s legal position.

What Are the Limits of a Token’s Record?

The link to a token’s metadata can change. ERC-721 allows the link to change from time to time, so a token ID can come to point to a different file.

A copy of a file is not the token. Copying a picture or another file does not copy the token’s record, which lists a token ID and an address.

How Do Fungible Tokens and NFTs Compare?

The table compares a fungible token that a token contract tracks with an NFT. Other designs for fungible tokens exist, so the first column describes only the token-contract model.

Does Bitcoin Have NFT-Like Data?

Bitcoin has NFT-like data called inscriptions, which this glossary entry does not call tokens on its own account, and the Ordinals and Runes entry explains how an inscription is recorded.

What Does This Description Leave Out?

This glossary entry is not advice to buy, sell, mint, or trade any token. It does not assess any token and does not cover its legality or classification in any country. As of October 2026, it follows the ERC-721 text and one documentation page on NFTs; both can change. Other blockchains and other standards can work differently.