What is a non-fungible token (NFT)? Learn about the common classification methods of NFT in this article

Non-fungible tokens (NFTs) are unique digital assets whose ownership and scarcity are guaranteed by blockchain technology. They are indivisible, unlike fungible tokens. NFTs can be divided into several common categories, including: art and collectibles (e.g., digital art, collectibles), in-game assets (e.g., skins, virtual land), virtual real estate, certification credentials (e.g., digital certificates, academic certificates), and Tokenization of physical assets (e.g. real estate, vehicles).

What is a non-fungible token (NFT)?

A non-fungible token (NFT) is a unique, non-fungible digital asset that utilizes blockchain technology to prove its ownership and scarcity. Unlike fungible tokens such as Bitcoin, NFTs are unique and indivisible, meaning they are not fungible with each other like currencies.

Common classification methods of NFT

Based on its use and function, NFT can be divided into the following common categories:

1. Art and Collectibles

One of the most common uses of NFTs is to represent art and collectibles. By tokenizing digital art or physical items, artists and collectors can create digital proof of ownership of their works and ensure ongoing scarcity and value.

2. In-game assets

NFT is also becoming more and more popular in the gaming industry. They represent unique in-game items, such as skins, weapons, or virtual lands, allowing players to own these assets and trade them within or across games.

3. Virtual Real Estate

NFT is also used to create virtual real estate, allowing users to buy and own land or buildings in the virtual world. Such NFTs provide proof of scarcity and ownership and add a new dimension to virtual experiences.

4. Proof Credentials

NFT can be used to prove ownership, identity or achievement. They can be used to issue digital certificates, academic qualifications or membership certificates, increasing the reliability and security of credentials.

5. Tokenization of Real Assets

NFTs can also be used to tokenize real-world assets, such as real estate, vehicles, or precious metals. By recording ownership on the blockchain, NFTs can provide transparency, auditability and reduced costs in asset transactions.

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