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NFTs are digital tokens that represent ownership of unique items. Learn how NFTs work in the MoneySense Glossary.
NFT stands for non-fungible token. It’s a unique digital asset that is not interchangeable with other assets of its kind (in contrast to fungible assets, such as cash or commodities, which are easily interchangeable).
NFTs function as certificates of authenticity and/or ownership for real or virtual assets. Sometimes the NFTs are the assets (for example, digital artwork). When NFTs are bought and sold, the transactions are recorded on a blockchain, or decentralized digital ledger.
NFTs have applications in many sectors, from music to real estate, but their value can be highly volatile. Some buyers have lost a lot of money, including Justin Bieber. In 2022, the pop star purchased a Bored Ape NFT for about USD$1.3 million (paid for in ethereum). Since then, the asset has plummeted in value to about USD$28,000, as of fall 2024.
Example: “Online marketplaces sell NFTs for everything from memes and music to tweets and avatars.”
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