An NFT, or non-fungible token, is a unique record on a blockchain that proves who owns a specific item. Unlike a cryptocurrency, where every unit is interchangeable, each NFT is distinct and cannot be swapped one-for-one with another.
Most people met NFTs during the 2021 boom, when profile-picture collections sold for enormous sums and a digital collage went for $69.3 million at Christie's. By most measures, that market has since collapsed. The underlying technology did not, and it now does quieter work than anyone was promising five years ago.
What "non-fungible" means
Fungible means interchangeable. One dollar is worth any other dollar, and one bitcoin is worth any other bitcoin, so lending someone a bitcoin and receiving a different one back leaves you unaffected.
Non-fungible means the specific unit matters. Two seats at the same concert are both tickets, and they are not the same ticket. A house deed identifies one house. Swapping either for a similar one is not a neutral trade.
| Fungible token | Non-fungible token | |
|---|---|---|
| Units | Identical and interchangeable | Each one distinct |
| Divisible | Yes, into fractions | Usually not |
| Examples | Bitcoin, ETH, USDT | Artwork, ticket, in-game item, domain name |
| Standard on Ethereum | ERC-20 | ERC-721, ERC-1155 |
How an NFT actually works
Here is the part that generates the most confusion.
At base, an NFT is a token ID recorded in a smart contract, along with the address that currently owns it. Almost always, the token also carries a link pointing to the thing it represents, whether that is an image, a video, or a file.
Generally, the image is not stored on the blockchain. Storing data on-chain is expensive, so the token holds a reference instead, commonly to IPFS or to a web server. Ownership of the token is what the blockchain records and enforces.
Two consequences follow, and both are worth internalizing before buying anything.
Anyone can view or copy the file. Right-clicking and saving the image was the standard joke, and technically it was correct. What you own is the token, not exclusivity over the pixels.
If the link breaks, the token points nowhere. Where the file sits on a normal web server and that server goes offline, the NFT still exists and no longer resolves to anything. Collections stored on IPFS with pinning are more durable, and durability varies substantially between projects.
What owning an NFT actually gives you
Legally, rather less than most buyers assumed during the boom.
Buying an NFT transfers the token. Whether copyright, commercial rights, or any licence comes with it depends entirely on the terms the project published, and those terms differ wildly. Some collections granted broad commercial rights to holders. Others granted nothing beyond a personal display licence. Many never addressed the question, which leaves the position untested.
What the blockchain reliably provides is provenance: an unbroken, publicly auditable record of who has owned this token since it was created. For authenticating a chain of custody, that is genuinely useful, and it is a narrower claim than "you own the art."
A short history
- 2014. Kevin McCoy mints "Quantum," generally considered the first NFT, on the Namecoin blockchain.
- June 2017. CryptoPunks launches, giving away 10,000 generated characters for free.
- November 2017. CryptoKitties congests the Ethereum network badly enough to raise fees for everyone, which was the first mainstream demonstration that this was real activity.
- January 2018. ERC-721 is finalised as a standard, making NFTs interoperable across wallets and marketplaces.
- March 2021. Beeple's "Everydays: The First 5000 Days" sells for $69.3 million at Christie's. Annual NFT trading volume reaches roughly $17 billion, up from about $82 million the previous year.
- 2022 onward. The speculative market contracts sharply and does not return.
What happened to the NFT market
Numbers vary by segment, and they all point the same direction.
Art NFT trading volume fell roughly 93% from its 2021 peak of about $2.9 billion by 2024, according to DappRadar, with active art traders dropping from around 529,000 in 2022 to under 20,000 by early 2025. Across the whole market, monthly sales declined from over $1 billion at the 2021 to 2022 peak to roughly $300 million by early 2026. A 2024 study of 5,000 collections found about 95% showed near-zero trading activity.
Several pressures arrived together. As interest rates rose, speculative capital left. Supply exploded as thousands of collections launched into a market that could not absorb them. Wash trading was exposed as a large share of reported volume. And the promised utility, in most cases, never shipped.
Surviving is a smaller and more specific set: gaming items, ticketing, blue-chip collections held by long-term collectors, and identity or access credentials. Total NFT market capitalisation sat around $2.6 billion in 2026, a fraction of the peak and considerably more grounded in actual use.
What NFTs are used for now
- Gaming items. Cosmetics, characters, and access passes players can trade outside the game's own economy.
- Ticketing. Verifiable, transferable entry that resists counterfeiting, with resale rules enforced in code.
- Domain names. ENS and similar systems, where a readable name maps to a wallet address.
- Membership and access. Tokens functioning as a credential for a community, an event, or software.
- Provenance for physical goods. Authenticating luxury items, where an auditable ownership chain has real value.
- Art collection. Smaller than in 2021, and still a real market among collectors who buy without intending to flip.
Risks to understand
- Liquidity is the core problem. Most collections have no buyers at any price. A floor price with no bids underneath it is not a price.
- Valuation has no anchor. Generating no income and carrying no book value, an NFT is priced entirely by what the next buyer will pay.
- Rights are frequently unclear. Read what the project actually grants before assuming you own anything beyond a token.
- File permanence varies. Check where the asset is stored and who is paying to keep it there.
- Wash trading distorts the data. Reported volumes on some collections reflect the same wallets trading with themselves.
- Scams are common. Fake collections, malicious mint sites, and airdropped NFTs designed to lure you onto a phishing page are all routine.
Where mb.io fits
To be clear, mb.io is a spot exchange for cryptocurrencies rather than an NFT marketplace. What it does offer is regulated access to the assets these ecosystems run on, since nearly every NFT transaction settles in a network's native token.
mb.io is backed by MultiBank Group, a financial institution founded in 2005 that serves more than 2 million clients across 100+ countries.
- Regulated by VARA in the UAE and AUSTRAC in Australia
- 10/10 security score from Hacken, an independent blockchain security auditor
- Institutional-grade MPC custody powered by Fireblocks, with segregated client funds
- A curated list of assets, so you're not sorting through thousands of tokens to find the ones worth trading
- Buy, sell, and swap in three steps, from sign-up to purchase
- 24/7 customer support, on web and on the iOS and Android apps
Open your account and start trading on mb.io.
Frequently asked questions
What does NFT stand for?
Non-fungible token. Non-fungible means each unit is unique and not interchangeable, which is the opposite of how a currency works.
If anyone can copy the image, what am I buying?
The token, and the publicly auditable record that you hold it. Copying the file has never been restricted. What the blockchain provides is provenance rather than exclusivity over the image.
Are NFTs dead?
The 2021 speculative market is gone. Art NFT volume fell roughly 93% from its peak and around 95% of collections show near-zero activity. Total market capitalisation sat near $2.6 billion in 2026, concentrated in gaming, ticketing, and blue-chip collections.
Do I own the copyright to an NFT I buy?
Usually not. Copyright transfers only if the project explicitly grants it, and terms vary enormously between collections. Many never specified anything at all.
Where is the actual image stored?
Rarely on the blockchain, since on-chain storage is expensive. The token holds a link, commonly to IPFS or a web server. If that location goes offline, the token remains and no longer resolves to the file.
What is the difference between ERC-721 and ERC-1155?
ERC-721 handles one-of-one unique tokens. ERC-1155 lets a single contract manage many token types at once, including multiple copies of the same item, which cuts costs substantially for games.
What was the first NFT?
"Quantum," minted by Kevin McCoy in 2014 on Namecoin, is generally credited as the first. The format only became widely usable after ERC-721 was standardised in January 2018.
Can I sell an NFT whenever I want?
Only if a buyer exists. This is the difference between NFTs and liquid markets: a displayed floor price means nothing without bids behind it, and most collections have none.
