What are NFTs?

What Are NFTs?

NFTs (non-fungible tokens) are unique digital assets recorded on a blockchain. "Non-fungible" means one is not interchangeable with another (unlike a rupee or a Bitcoin). Each NFT has a unique ID and usually links to a file (image, video, etc.) or represents ownership of something. Ownership is proven by the blockchain; the file may be stored elsewhere.

What They Can Represent

NFTs can be art, collectibles, in-game items, membership passes, or proof of ownership for real-world assets. What you "own" is the token and whatever rights the project grants (e.g. commercial use, access). The link to the image or data can break if the host goes away, so consider what you are actually buying.

Risks and Tax

NFT prices can be very volatile. Many projects have little or no liquidity. Scams and copycat projects are common. In India, buying and selling NFTs can be taxable. Only spend what you can afford to lose and use known platforms and wallets.