What is an NFT?

An NFT is not quite what you think. What is an NFT – A simple explanation for beginners with examples how NFTs work on Ethereum.

What is an NFT?

A Non-fungible token is a one-of-a-kind token generated on a blockchain. This token can be linked to a specific picture, video, song or file to prove ownership. NFTs can exist on most smart contract blockchains.

What are NFTs on Ethereum?

On the Ethereum blockchain there are tokens and non-fungible tokens.

A token like DAI has the exact similar properties as any other DAI token.

It’s fungible.

A non-fungible token does not share the exact similar properties of any other NFT. 

It’s non-fungible.

NFTS on Ethereum must be unique in terms of:

  • contract address 
  • TokenID

The contract address is the unique address for any contract when deployed to Ethereum. You might think of it like the public address to your Ethereum wallet but for an NFT contract.

The tokenID is a uint256 variable. Which is a number between 0 – 2^256-1. 

NFT token standards

The contract is created with one of these tokens types.

  • ERC-721 is the current standard for NFTs
  • ERC-1155 is the multi-token standard. Tokens in the contract can have properties of both ERC-20 tokens and ERC-721.

What is a contract address?

NFTs are deployed with a contract address to the blockchain. Within this contract are properties and functionalities.

An ERC-721 token contract features options for:

  • Query number of tokens
  • Transfers 
  • Query accounts
  • Query total balances
  • Approve transfer by a third party (like submitting a listing to a marketplace)
  • Metadata

The Metadata is the information and link to the file (image, song, video) that we reference when we talk about NFTs. This is however an optional extension to an NFT contract. Marketplaces like Opensea queries this metadata to get information about a collection. 

The image or file of the NFT is often stored on IPFS in order to make it make sure it doesn’t go down. Other storage solutions like Arweave are also emerging.

An ERC-1155 contract has extra features like:

  • Batch transfer
  • Batch approve

What is an NFT tokenID?

The actual NFT is the tokenID in the deployed contract address.

The image that people call the NFT is just linked in the metadata of the NFT.

Read more about what NFTs are used for here.

 

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