What it doesn't mean
Not necessarily. The blockchain records who owns the token. What legal rights come with it, if any, depend on the terms of each sale, and in many cases those rights are uncertain.
Both live on blockchains, but a cryptocurrency is fungible: one coin equals another. An NFT is designed to be unique, which is the whole point of the 'non-'.
What it really means
NFT is a Word of the Year that the world went off almost as soon as it was chosen.
Collins named it Word of the Year for 2021. It called NFT a buzzword everyone had heard over and over in the past twelve months, in breathless news reports and on social media. Collins defined it as "a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible". In other words, it is a piece of data that records who a particular digital thing belongs to.
Collins presented the pick as part of a bigger story: money and the internet coming together. Facebook had just renamed itself Meta to signal its interest in the metaverse, and crypto had become a household word even if few people understood how it worked. What really caught people's attention, Collins said, was NFTs being used to sell art. In March 2021 the rights to a work by the digital artist Beeple sold at Christie's for $69m. The piece, EVERYDAYS: THE FIRST 5000 DAYS, was a collage of the images he had made every day since 2007.
The key word is non-fungible. Fungible is an old legal term, recorded from 1818, for things that can be replaced by another of the same kind: one £10 note is as good as any other. An NFT is meant to be one of a kind. That uniqueness, recorded publicly on a blockchain, was supposed to make digital scarcity possible.
The timing turned out to be the peak. NFT trading grew from about US$82 million in 2020 to about US$17 billion in 2021. In 2022 the market collapsed: one estimate in May 2022 put sales down over 90% on the year before. The word has outlasted the boom it was named for.
Where it comes from
not
capable of being replaced by another of the same kind; a legal term from 1818, from Latin fungi, 'to perform'
a unit recorded on a blockchain
Fungible things are interchangeable: one £10 note is as good as any other. A non-fungible token is meant to be one of a kind.
- May 2014
The first known NFT, 'Quantum', is created by Kevin McCoy and Anil Dash and sold for $4 at a live presentation in New York.
- 2017
NFTs are pitched as a new class of investment asset.
- March 2021
The rights to a work by the digital artist Beeple sell at Christie's for $69m.
- 24 November 2021
Collins names NFT its Word of the Year 2021. NFT trading that year reaches about US$17 billion, up from about US$82 million in 2020.
- 2022
The NFT market collapses. A May 2022 estimate puts the number of sales down over 90% on 2021.
In real life
- He spent his savings on an NFT of a cartoon ape in 2021. By 2023 he described it, politely, as a souvenir.
- The museum used an NFT to keep a public record of who bought the digital artwork, while the gallery kept the file itself.
- 'Non-fungible' sounds complicated, but it just means 'not interchangeable': your house keys are non-fungible, and so is your signed concert ticket.
Questions
Q01What does NFT stand for?
Non-fungible token. Collins defines it as 'a unique digital certificate, registered in a blockchain, that is used to record ownership of an asset such as an artwork or a collectible'.
Q02What does non-fungible mean?
Not interchangeable. Money is fungible: any pound is as good as any other. A non-fungible thing is one of a kind, like an original painting or a specific seat at a concert.
Q03Why was NFT Collins's Word of the Year 2021?
Collins said it was a buzzword heard over and over in 2021, in breathless news reports and on social media. It saw it as part of a wider convergence of money and the internet, alongside crypto and the metaverse.
Q04What happened to NFTs after 2021?
The market collapsed in 2022. A May 2022 estimate put sales down over 90% on 2021, and one report in September 2023 claimed that over 95% of NFT collections had no monetary value. This page explains the word. It isn't investment advice.
Sources
- Get your crypto at the ready: NFTs are big in 2021. Collins Dictionary Language Blog (24 November 2021).
- Non-fungible token: Wikipedia.
- fungible (adj.): Online Etymology Dictionary.