An NFT (non-fungible token) is a token on a blockchain that is unique and is recorded under one owner's address. It proves who holds that particular token. Usually it does not hold the artwork, it does not give you the copyright, and it cannot stop anyone from copying the file. In late 2026 the market is much smaller than at its peak: on 12 October 2026 the NFT marketplace Blur said it would shut its website in November, after its monthly trading volume fell from about $1.43 billion in March 2023 to under $7 million by March 2026, according to data from The Block and Token Terminal.
What "non-fungible" means
"Fungible" means interchangeable. One unit of a currency or a coin is worth the same as any other unit, so you can swap them one for one. "Non-fungible" means each unit is distinct. The Ethereum Foundation's NFT page puts it this way: each NFT has its own properties, so no two are the same. A fungible token like a dollar stablecoin works the other way, with every unit identical.
The ERC-721 standard calls non-fungible tokens "also known as deeds." That is the most useful picture to keep in mind. An NFT is closer to a title record than to the object itself. The standard lists physical property, virtual collectibles and even "negative value" assets such as loans as things an NFT can track. It says each NFT must be tracked separately because NFTs are "distinguishable."
How NFTs work
The ledger
When an NFT is created ("minted"), a smart contract writes a token with its own ID to a blockchain and assigns it to an owner's address. Anyone can check who owns it. When it is sold or transferred, the contract changes the owner address. The scarcity comes from this public record. A copy of the image is not scarce, but the entry in the ledger is.
Token standards
On Ethereum, two standards cover most NFTs:
- ERC-721 ("Non-Fungible Token Standard", created 24 January 2018, status Final). One contract, many unique tokens, each with its own ID. The standard names CryptoKitties, the breedable digital cats game, as prior art built on an earlier version of it.
- ERC-1155 ("Multi Token Standard", created 17 June 2018, status Final). One contract can manage fungible and non-fungible token types together. This suits games that need both currencies and unique items.
Other blockchains have their own token formats that do the same job.
Metadata and where the file lives
ERC-721 lets each token return a tokenURI, which is a link to a JSON file with fields such as name, description and image. The standard makes this metadata extension optional. In practice, the image is often stored somewhere other than the blockchain, and the token only points to it. If the server or storage behind that link goes away, the token still exists but may point to nothing. Before you buy, check where the media and metadata are stored.
What you actually own
Buying an NFT gets you control of the token, not automatically any rights in the work it points to. The U.S. Copyright Office and the USPTO finished a joint study of NFTs and intellectual property on 12 March 2024. They concluded that existing enforcement tools are "currently sufficient," that changes to IP law are "not necessary or advisable at this time," and that public education and clear product information would help buyers understand what they are getting. The report also notes that if an NFT contains or links to an unauthorised copy of a copyrighted work, creating or selling it raises the same copyright issues as any other unauthorised copy.
The licence that matters is the one the project or seller attaches, if there is one. Read it.
Royalties are not guaranteed
Creator royalties on resales are often presented as a built-in feature. The royalty standard, EIP-2981 (Final), says plainly that "the royalty payment must be voluntary," and that "if a marketplace chooses not to implement this EIP, then no funds will be paid for secondary sales." The contract can report what royalty the creator wants. Whether anyone pays it depends on the marketplace.
How the US now classifies NFTs
On 17 March 2026 the SEC issued an interpretation, which the CFTC joined, on how federal securities laws apply to crypto assets. It sorts tokens into five categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities. The SEC's press release lists the categories. According to a summary by the law firm Goodwin, digital collectibles are described as not securities and as assets "designed to be collected and/or used." Examples given include artwork, music, videos, trading cards, in-game items and references to memes, characters or current events.
There are two caveats in the release. A non-security asset can still be sold as part of an investment contract, which is a security, and the interpretation explains how an asset can become subject to one and later stop being subject to one. Law-firm summaries also note that splitting a collectible into fractional shares could amount to offering a security. This summary covers US federal treatment only. Other countries apply their own rules.
What would you actually own?
Answer four questions about an NFT you are looking at to see what the token gives you and what it does not.
Have you checked the contract address against the project's official channels?
- Yes, it matches → next question
- No, or I am not sure → Check the contract first
Where are the media and metadata stored?
- On the blockchain itself → next question
- Somewhere else; the token only links to it → The file may not last
- I don't know → The file may not last
Does the project or seller attach a licence to the work?
- Yes, and I have read it → next question
- No licence, or I have not read it → You own the token, not the work
Does the creator rely on royalties from resales?
- Yes, royalties matter here → Royalties depend on the marketplace
- No → You know what you are getting
Copycat collections can reuse the same name and images. Until the contract address matches the project's official channels, you cannot be sure which token you are getting.
If the token only points to a file stored off-chain and that server or storage goes away, the token still exists but may point to nothing. Find out where the media and metadata live.
Buying an NFT gives you control of the token, not automatically any copyright or other rights in the work. Those rights come only from a licence or agreement attached to it.
Under EIP-2981 the royalty payment is voluntary. The contract can report the royalty the creator wants, but if a marketplace does not implement the standard, nothing is paid on resales.
You have checked the contract, the storage and the licence: you would hold the token plus whatever rights the licence grants. Liquidity, price and platform shutdown risks still apply.
This covers what the token and its licence give you; it does not judge an NFT's price or value, check for scams, or cover tax or the rules outside US federal law.
A short history in figures
- 2017–2018: CryptoKitties appears on Ethereum, and the ERC-721 standard is drafted in January 2018.
- 11 March 2021: Beeple's "Everydays: The First 5000 Days" sells in a Christie's online auction for $69,346,250. Bidding started at $100. Christie's described it as the first purely digital work offered by a major auction house.
- 2021: NonFungible.com's annual report, published 10 March 2022, put NFT sales at more than $17.6 billion, up from about $82 million in 2020. Outlets quoted the 2020 base as $82 million or $82.5 million. The company says its data excludes bot and wash trading. Other trackers gave higher estimates.
- 2 December 2024: Nike announced it would wind down RTFKT, its NFT sneaker and avatar studio, by the end of January 2025, and said the tokens would stay accessible.
- Q3 2025: DappRadar's quarterly industry report counted more than 18.1 million NFT sales generating about $1.6 billion in volume. That was the most sales in a quarter since 2022, but at lower prices per sale.
- October 2026: Blur announces it will close its marketplace website, though its on-chain protocol keeps running, and stops matching new loans on its lending product Blend on 12 November 2026. The Block also reported shutdown announcements from two Ethereum layer-2 networks tied to NFT projects, Blast (2 October) and Abstract (6 October).
What NFTs are used for
The Ethereum Foundation lists art, collectibles, event tickets, game items, course certificates, online identity, domain names and real-world assets such as property. What these have in common is a need to show who owns or holds access to one specific item, and to let it move between applications that read the same chain. How well this works depends on whether the issuer, game or venue recognises the token. A ticket NFT only gets you in if the venue checks it.
How to buy one safely
- Set up a wallet that supports the chain the NFT is on. Store the recovery phrase offline and never type it into a website. See our guide to [storing crypto safely](/blog/how-to-store-and-access-crypto-assets-safely-complete-2026-guide/).
- Fund it with that chain's native coin, and keep some extra for network fees. Ethereum fees rise when the network is busy; our explainer on [gas fees](/blog/gas/) covers why.
- Pick a marketplace that supports that chain. See our overview of [NFT marketplaces](/blog/nft-marketplace/).
- Check the contract address against the project's official channels before you buy. Copycat collections can reuse the same name and images.
- Check where the media is stored and read the licence, so you know what you are buying.
- After buying, confirm the token shows up in your wallet under the correct contract.
Common scams include fake collections, impersonated mint pages, and links that ask you to sign transactions that drain your wallet. If a promise of "guaranteed" returns appears, treat it as a warning sign.
Risks to understand
- Liquidity: there may be no buyer at a price you would accept. Low volume, as at Blur, makes this worse.
- Price: NFT floor prices have fallen sharply since their peaks and may not come back.
- Project and platform risk: studios, marketplaces and even blockchains shut down, as RTFKT, Blur's website, Blast and Abstract show.
- Storage risk: media stored off-chain can disappear.
- Rights risk: without a licence, you own the token, not the work.
Frequently asked questions
What does NFT stand for?
Non-fungible token: a token that is unique and cannot be swapped one for one with another.
Is an NFT the same as a cryptocurrency?
No. Units of a cryptocurrency are identical and interchangeable. Each NFT has its own ID and is tracked separately (ERC-721).
Do I get the copyright when I buy an NFT?
Not automatically. Rights depend on any licence or agreement that comes with it. The 2024 Copyright Office and USPTO study found existing IP law applies to NFTs as it does to other copies.
Are NFTs securities in the US?
Under the SEC's 17 March 2026 interpretation, digital collectibles fall in a non-security category. NFTs sold as part of an investment contract, or split into fractional shares, can still be securities.
Are NFTs dead in 2026?
No, but the market is smaller and has fewer venues than in 2021. Sales counts rose in 2025 while dollar volume stayed low, and several NFT platforms announced shutdowns in October 2026.
Limitations: market figures come from different trackers that use different methods, and Blur's volume figure rests on a single source (The Block / Token Terminal).
