An NFT (non-fungible token) is a unique on-chain token. Unlike fungible coins such as USDC, where each unit is interchangeable, one NFT is not meant to be a perfect substitute for another. NFTs can represent art, collectibles, tickets, memberships, game items, or other claims whose identity matters.
Why it matters
Fungible tokens trade on deep books with continuous pricing. Many NFTs trade on thin order books or peer-to-peer listings where one sale sets a noisy floor. Liquidity is uneven, spreads are wide, and valuations are narrative-heavy. That does not make every NFT worthless. It does mean sizing and exit planning must respect thin markets.
Utility varies. Some collections are speculative images. Others gate access, royalties, or in-game inventory. Smart-contract standards, royalty enforcement, and marketplace rules change how cash flows work after the mint. Wash trading and fake volume can distort popularity metrics, so desks verify real transfers and unique buyers when a floor looks too neat.
For traders coming from spot crypto, the key shift is inventory risk. You may wait longer to exit at a fair price, and comparable sales may be sparse. Treat hype cycles carefully. Ownership of the token is on-chain. Off-chain rights, IP licenses, and customer support still depend on issuers and platforms.
Simple example
Two NFTs from the same collection can have very different bids because traits differ. One rare trait listing may sit far above the floor while common traits trade near it. Calling the collection one price hides that dispersion. Liquidity for the rare trait may be a handful of collectors, not a deep market.
If you trade NFT floors, size for time. A bid that looks firm can vanish when the next listing hits, and realizing a mark-to-market gain may require waiting for the right collector rather than hitting a deep book.
Related terms
See liquidity, smart contract, Ethereum, marketplace, and crypto glossary.