By NFT-List
October 19, 2022

What exactly is a non fungible token?

 Non Fungible Token

Let's learn all about Non Fungible Tokens

A non-fungible token, also called a non-unique token or a unique token, is a type of digital token that is not interchangeable with another token. Each unit of the token represents something unique such as an asset, document, or an individual known as an owner. Each non-fungible token has its own identity and cannot be broken down into smaller units and recombined to create a new asset. Tokens can be fungible or non-fungible – meaning whether one unit of the given token is the same as another unit of that same token. Non-fungible tokens have many applications in various industries like gaming, healthcare, supply chain management and real estate. In this blog post we will explore what are NFTs and how they can be used in real world scenarios.

What are the different types of tokens?

There are four different types of tokens: fungible, semi-fungible, non-fungible, and colored. Fungible tokens can be broken down into smaller units. Most cryptocurrencies, including Bitcoin, are fungible tokens. Semi-fungible tokens represent a group of items that are interchangeable but not completely fungible. Cryptokitties, for example, are a type of semi-fungible tokens because one kitty is interchangeable with another but they don’t represent one specific kitty. Non-fungible tokens (NFTs) can be broken down into smaller units, but each unit represents a unique product. Cryptokitties, for example, are a type of non-fungible token because each kitty’s genes are unique. Colored tokens represent a group of items that are partially interchangeable. You could imagine colored tokens as representing a team or an organization.

How do non-fungible tokens work?

A non-fungible token is a representation of a unique asset. The owner of the NFT can transfer the ownership of the asset to someone else. If you receive a non-fungible token, you don’t own the entire asset but you own the rights to the token. The owners of the asset only send you the token, not the entire asset. If you want to own the asset, you need to buy it.

Real world applications of NFTs

The gaming industry is one of the earliest adopters of NFTs. The gaming industry deals with a wide variety of virtual assets and virtual goods. These goods are non-fungible and can be traded for other virtual goods. The trading of goods has created an ecosystem of gamers who buy, sell and trade goods online. The use of NFTs in the gaming ecosystem has increased the frequency of trading goods among gamers and has also increased the overall monetization of these goods. The healthcare industry is dealing with an increasing amount of data and a growing number of patients. A patient’s data, such as that of their health report, genetic information, and biometric data, is non-fungible and needs to be handled with care. The supply chain industry deals with a lot of goods that need to be transported from one factory to another. Along with the goods, a lot of documents are also transferred through the supply chain, such as the item’s source, date of creation, and date of shipment. The documents are non-fungible and need to be controlled and signed off by every person involved in the chain.

Limitations of NFTs

The entire blockchain ecosystem is based on trust, and the non-fungible tokens are an exception to that rule. The owners need to trust the source of the data being used to create the non-fungible token. The potential of NFTs is limited to the digital world and can cause a lot of issues when it comes to real world applications. The biggest challenge with NFTs is the lack of authenticity of the data being used. The digital environment lacks a consensus on the authenticity of documents and data, which makes it difficult for non-fungible tokens to be used in the real world.


Non fungible tokens are getting a lot of attention from blockchain entrepreneurs because they have more real world applications than fungible tokens do. Non fungible tokens are useful for transferring ownership of virtual assets and can be used in supply chains, healthcare and gaming. However, they aren’t appropriate for all use cases. The data used to create non fungible tokens must be accurate and trusted. Because of these limitations, only a small percentage of assets can be digitized using NFTs.