NFTs are in the zeitgeist right now: perhaps you've seen punks, apes and penguins taking over Twitter profiles, or watched a dog JPEG sell for $4 million. By the end of this chapter, you'll understand how NFTs work—and we'll shoehorn them into our Tic-Tac-Toe game.
Unlike fungible ERC20s, NFTs represent unique entities. They are still tokens—ownable, transferrable assets whose ownership is recorded on a digital ledger—but they aren't interchangeable or divisible like ERC20s. A nonfungible token has unique characteristics that mean one token is not the same as another. Like all tokens, they are an abstraction that can be used to represent many things:
- Collectibles, like Cryptopunks
- Artwork, like Art Blocks
- Ownership over real world assets, like a digital deed
- Obligations, like loans
- Voting rights or governance power
- Skills and reputation, like lvl protocol
- Domain names, like ENS domains
- Unique instances of a Tic Tac Toe game.
Although there's a lot of hype in the NFT market right now, they are a composable building block that can be much more than a monkey JPEG.