NFTs are non-fungible tokens. It is necessary to be clear about the concepts of ‘fungibility’ and ‘non-fungibility’. Fungible means any product or asset that can be interchanged with another product or asset of similar type. Money is fungible because if you take a single 2000 rupee note or four five hundred rupee notes or ten 200 rupee notes or twenty 100 rupee notes, the value remains the same for each one. Metals such as gold and silver are fungible, as are other commodities. Even bonds and shares are fungible. Cryptos too are fungible, as one bitcoin and another bitcoin has the same value.

Non-fungible means something that is unique and cannot be replaced with something else. NFTs represent a unique underlying asset. In economics, non-fungibility refers to something that cannot be replaced or interchanged owing to its unique properties.

NFTs indicate digital representation of ownership of such a product on a blockchain. An NFT could be a digital or physical asset or anything else that has value.