What are Non-Fungible Tokens (NFTs) 

Welcome to this module on blockchain and digital assets.

In this lecture, we'll explore Non-Fungible Tokens (NFTs), a groundbreaking innovation in the world of decentralized technology.

NFTs are unique digital certificates of ownership stored on a blockchain, typically Ethereum, using standards like ERC-721 or ERC-1155. Unlike fungible tokens such as Bitcoin—where one unit is interchangeable with another—NFTs are indivisible and one-of-a-kind, thanks to their embedded metadata that includes provenance, creator details, and unique identifiers verified by cryptography.

The process begins with *minting*: creators upload digital content (art, music, videos, virtual land, or even tweets) to a blockchain via platforms like OpenSea, Rarible, or Foundation. This creates a tamper-proof record. Ownership transfers occur through smart contracts, enabling features like automatic royalties (e.g., 10% of resale value to the original artist). Marketplaces facilitate auctions and fixed-price sales, with buyers receiving wallet-based proof of authenticity.

NFTs have democratized access to art and collectibles, empowering independent creators to bypass traditional gatekeepers like galleries. High-profile examples include Beeple's $69 million artwork sale in 2021 and CryptoPunks, early pixel-art avatars now worth millions. Beyond art, NFTs power gaming (e.g., Axie Infinity's play-to-earn models), virtual worlds like Decentraland, and even real-world tickets or patents.

However, challenges persist: Ethereum's proof-of-work (now shifting to proof-of-stake) consumes massive energy, raising environmental concerns. High "gas fees" during peak times exclude smaller users, and the 2021-2022 boom led to speculative bubbles, scams, and market crashes—highlighting risks of hype over utility.

Legally, questions around copyright and intellectual property remain unresolved. In summary, NFTs introduce verifiable digital scarcity and new economic models, but require critical evaluation of their sustainability and equity. For this week's activity, review an NFT project on OpenSea and discuss its potential societal impact in the forum.

Readings: Vitalik Buterin's Ethereum whitepaper and "The NFT Handbook."