In March 2021, digital artist Beeple sold an NFT artwork for $69.3 million at Christie's auction house. It was the third-highest price ever paid for a work by a living artist — and it was entirely digital.
Since then, NFTs have exploded into mainstream consciousness. From celebrity profile pictures to virtual real estate worth millions, NFTs have changed how we think about digital ownership.
But what exactly is an NFT? How do they work? And in 2026, are they still relevant?
This guide explains everything in plain English — no technical background required. Let's dive in.
What Does NFT Stand For?
NFT stands for Non-Fungible Token. Let's break that down:
- Non-Fungible = Unique, one-of-a-kind, cannot be swapped equally for something else
- Token = A digital certificate or record stored on a blockchain
💡 Fungible vs Non-Fungible
Fungible items are interchangeable. One dollar bill is the same as any other dollar
bill. One Bitcoin is identical to another Bitcoin.
Non-fungible items are
unique. The Mona Lisa is not the same as any other painting. Your childhood home is not the same as
any other house. An NFT is unique — even if it looks similar to others.
Think of an NFT as a digital certificate of authenticity. Just like you might have a certificate proving you own an original Picasso, an NFT proves you own the original version of a digital item.
How Do NFTs Work?
NFTs use blockchain technology to create permanent, unchangeable proof of ownership. Here's how they work:
The Role of Blockchain
When you buy an NFT, your ownership is recorded on a blockchain — a public, decentralized ledger that millions of computers maintain. This record:
- Cannot be altered or deleted
- Is publicly verifiable by anyone
- Shows the complete ownership history of the NFT
- Transfers automatically when you sell
Smart Contracts
NFTs are created and managed by smart contracts — self-executing code that lives on the blockchain. These contracts:
- Define who owns the NFT
- Handle the transfer when it's sold
- Can automatically pay royalties to the original creator
- Enforce rules (like limiting how many copies exist)
Metadata and Storage
Most NFTs don't store the actual artwork on the blockchain (it would be too expensive). Instead, they store:
- Metadata: Information about the NFT (name, description, properties)
- Link: A pointer to where the actual file is stored (usually IPFS or a server)
⚠️ Bitcoin Ordinals Are Different
Unlike Ethereum NFTs, Bitcoin Ordinals store the actual image data directly on the Bitcoin blockchain. This makes them truly permanent and "fully on-chain." Learn more in our Bitcoin Ordinals Guide.
What Can Be an NFT?
Almost anything digital can be turned into an NFT. Here are the most common types:
Digital Art
Illustrations, paintings, generative art, AI art, photography. This is what started the NFT boom.
Music & Audio
Songs, albums, sound effects, exclusive releases. Artists can sell directly to fans.
Videos & Clips
Short films, sports highlights (NBA Top Shot), memorable moments.
Virtual Real Estate
Land in virtual worlds like Decentraland, The Sandbox, and metaverse platforms.
Gaming Items
In-game skins, weapons, characters, collectibles that you truly own and can sell.
Event Tickets
Concert tickets, exclusive access passes, membership cards that can't be counterfeited.
Domain Names
Blockchain domain names like .eth addresses that you fully own.
Real-World Assets
Certificates for physical art, real estate deeds, luxury goods authentication.
How to Buy NFTs — Step by Step
Ready to buy your first NFT? Here's exactly how to do it:
- Set up a crypto wallet
For Ethereum NFTs, use MetaMask. For Bitcoin Ordinals, use Xverse or Leather. For Solana, use Phantom. - Buy cryptocurrency
You'll need ETH (Ethereum), BTC (Bitcoin), or SOL (Solana) depending on which blockchain you're buying from. Purchase from an exchange like Coinbase or Kraken. - Transfer crypto to your wallet
Send the cryptocurrency from the exchange to your wallet address. Double-check the address — mistakes are irreversible! - Connect wallet to a marketplace
Visit an NFT marketplace (like OpenSea) and click "Connect Wallet." Authorize the connection. - Browse and buy
Find an NFT you like, click "Buy Now" or place a bid, and confirm the transaction in your wallet. - View your NFT
After purchase, the NFT appears in your wallet. You can view, sell, or transfer it anytime.
💰 Pro Tip: Watch the Gas Fees
On Ethereum, you'll pay "gas fees" for transactions. These can range from $5 to $50+ during busy times. Check gas prices at Etherscan and buy when fees are lower (usually late night/early morning UTC).
Top NFT Marketplaces in 2026
Here's where to buy NFTs on different blockchains:
| Marketplace | Blockchain | Best For | Fees |
|---|---|---|---|
| OpenSea | Ethereum, Polygon, Solana | Largest selection, beginners | 2.5% |
| Blur | Ethereum | Traders, pro users, 0 fees | 0% |
| Magic Eden | Bitcoin, Solana, Ethereum | Ordinals, cross-chain | 2% |
| Foundation | Ethereum | Curated art, high quality | 5% |
| Rarible | Multi-chain | Creator-friendly | 1% |
| LooksRare | Ethereum | Trading rewards | 2% |
NFTs on Bitcoin — Ordinals Explained
In 2023, something revolutionary happened: NFTs came to Bitcoin.
Bitcoin Ordinals are a way to inscribe data (images, text, audio) directly onto individual satoshis (the smallest unit of Bitcoin). Unlike Ethereum NFTs, Ordinals are:
- Fully on-chain: The actual data lives on Bitcoin forever
- Immutable: Cannot be taken down or censored
- Scarce: Limited by Bitcoin's block space
Popular Bitcoin Ordinal collections include NodeMonkes, Bitcoin Puppets, and Bitmap. The ecosystem also includes:
- BRC-20: Fungible tokens on Bitcoin
- Runes: An improved token standard launched in 2024
📖 Deep Dive
Want to learn more? Read our comprehensive Bitcoin Ordinals Guide for everything you need to know about NFTs on Bitcoin.
Are NFTs a Good Investment?
Let's be honest: most NFTs are not good investments.
During the 2021-2022 boom, many people bought NFTs hoping to flip them for profit. Some became millionaires. Most lost money when the market crashed in 2022-2023.
What Affects NFT Value?
- Rarity: How rare is your NFT within its collection?
- Creator reputation: Is the artist well-known and respected?
- Community: Is there an active, engaged community?
- Utility: Does owning it give you access or benefits?
- Historical significance: Is it an early/important piece?
Warning Signs of Bad Projects
- Anonymous team with no track record
- Promises of guaranteed returns
- Copied artwork or plagiarism
- No clear roadmap or utility
- Massive hype with no substance
⚠️ Investment Warning
NFTs are speculative and highly volatile. Most NFTs drop 90%+ from their mint price. Never invest more than you can afford to lose. This is not financial advice.
Why NFTs Matter Beyond Art
The real potential of NFTs goes far beyond profile pictures. Here's what matters:
True Digital Ownership
For the first time, you can truly own digital items. No company can take them away. You can sell, trade, or transfer them freely.
Creator Royalties
Artists can earn royalties every time their NFT is resold. Sell once, earn forever. This is revolutionary for creators.
Proof of Authenticity
Luxury brands use NFTs to prove products are genuine. Tickets can't be counterfeited. Credentials can be verified.
Gaming Revolution
Players can actually own in-game items and sell them for real money. Your gaming achievements have real value.
Access & Membership
NFTs can serve as membership cards to exclusive communities, events, and experiences.
Common NFT Scams to Avoid
The NFT space has its share of bad actors. Protect yourself:
Rug Pulls
Creators hype a project, collect money, then abandon it and disappear. Always research the team.
Fake Collections
Scammers copy popular collections with slightly different names. Verify official links on the project's Twitter/Discord.
Phishing Links
Messages with links that drain your wallet when you connect. Never click links in DMs. Bookmark official sites.
Wash Trading
Artificially inflated sales volume makes projects look more popular. Check if the same wallets are buying and selling.
🛡️ Stay Safe
Use a hardware wallet for valuable NFTs • Never share your seed phrase • Verify collection contracts on Etherscan • Don't trust DMs • DYOR (Do Your Own Research)
Frequently Asked Questions
You can take a photo of the Mona Lisa, but that doesn't make it yours. An NFT represents verifiable ownership recorded on the blockchain. The value is in the provenance — proving you own the original, not a copy.
NFT trading volume dropped 90%+ from the 2021-2022 peak, but the technology isn't dead. The hype decreased, but utility-focused NFTs, Bitcoin Ordinals, and gaming NFTs continue to grow. The space is maturing beyond speculation.
You can create (or "mint") an NFT on platforms like OpenSea, Rarible, or Foundation. Upload your file, add metadata, set your price, and pay the gas fee. Check our complete guide on creating and selling NFTs.
In most countries, yes. NFT sales are typically treated as capital gains. You may owe tax when you sell an NFT for more than you paid. Keep records of all purchases and sales. Consult a tax professional for advice specific to your situation.
"The Merge" by Pak sold for $91.8 million in December 2021, though it was sold in fragments to nearly 30,000 collectors. The highest single-buyer sale was Beeple's "Everydays: The First 5000 Days" at $69.3 million.
Ethereum NFTs use smart contracts and typically store data off-chain. Bitcoin Ordinals inscribe data directly onto satoshis, making them fully on-chain and permanent. Ordinals are newer but growing rapidly. Each has different marketplaces and wallets.
Ready to Explore the NFT World?
Now that you understand NFTs, take the next step. Set up a wallet, explore marketplaces, and remember — only spend what you can afford to lose.