NFT
An NFT is a token that exists in a single copy and therefore is not interchangeable: one bitcoin equals any other, while two NFTs are always different. It is how a claim to one specific thing is recorded on a blockchain: an image, an in-game item, a ticket.
How it works
The ERC-721 standard gives every token its own number inside a collection. The blockchain records which address owns the token with that number, and the full history of its transfers.
The file itself is almost never on-chain, being far too heavy. The token stores a link to the image, and where that image actually lives matters more than it looks. A content-addressed IPFS link outlives the project; an ordinary server link does not.
Owning the token and owning the copyright are separate. Unless the collection's terms hand over a licence explicitly, the purchase buys an entry on a blockchain rather than the right to use the picture.
A worked example
You sell an NFT for 2 ETH. The collection's creator royalty is 7.5% and the marketplace takes 2.5%.
| Sale price | 2.0000 ETH |
| Creator royalty, 7.5% | −0.1500 ETH |
| Marketplace fee, 2.5% | −0.0500 ETH |
| Net | 1.8000 ETH |
Ten percent left before gas. Buying at 1.9 ETH and selling at 2 ETH puts you underwater, even though the price "went up".
What to weigh
- Where the file livesIPFS or Arweave outlast the project. A link to the team's website disappears with the hosting bill.
- Whether it tradesA last-sale price means nothing at two trades a month. Read the sales count, not the floor price.
- What you are actually buyingRights, a licence, access to something, or just a record: it has to be written down rather than implied.
- The cost of leavingRoyalty plus marketplace fee runs to 10%. Price that into the purchase up front.
- Cloned collectionsCloning a collection costs nothing. Check the contract address against the official one rather than the name and the artwork.