NFT (Non-Fungible Token)
A unique digital token on a blockchain that represents ownership of a specific item — such as art, music, collectibles, virtual real estate, or in-game items. Unlike fungible tokens like BTC or USDC where each unit is identical, each NFT has a unique identifier making it one-of-a-kind. NFTs typically follow the ERC-721 or ERC-1155 token standard and store metadata pointing to the associated content.
“CryptoPunks and Bored Ape Yacht Club are popular NFT collections where each image is a unique, tradeable on-chain token with ownership history verifiable by anyone.”
ERC-721
The Ethereum token standard for non-fungible tokens (NFTs). Unlike ERC-20 tokens where each unit is identical, each ERC-721 token has a unique identifier making it one-of-a-kind. The standard defines functions for transferring, approving, and querying ownership of individual tokens, enabling digital art, collectibles, and unique digital assets.
ERC-1155
A multi-token standard on Ethereum that can represent both fungible and non-fungible tokens within a single smart contract. ERC-1155 is more gas-efficient than deploying separate ERC-20 and ERC-721 contracts, and supports batch transfers, making it popular for gaming assets and collections with varying rarity levels.
Token
A digital asset created on an existing blockchain rather than its own native chain. Tokens can represent a wide range of assets and utilities — from currency and governance rights to real-world assets and collectibles. Unlike coins (BTC, ETH) which are native to their blockchain, tokens are created using smart contracts on platforms like Ethereum (ERC-20, ERC-721).
Royalties (NFT)
An automatic payment to the original creator of an NFT each time the NFT is resold on a secondary market. Royalties are typically set between 2.5% and 10% of the sale price. While early NFT platforms enforced royalties on-chain, many newer marketplaces have made them optional, sparking debate about creator compensation.