Non-fungible tokens are digital assets that are stored in the blockchain; more accurately, if you purchase an NFT you buy a unique token that is then stored on a blockchain. A 'blockchain' is best considered as a shared online 'ledger' maintained across multiple computers on a shared network.
A 'blockchain' is best considered as a shared online 'ledger' maintained across multiple computers on a shared network
The concepts aren't new, to be clear, but the evolution of cryptocurrencies in particular — such as Bitcoin and Ethereum's 'Ether' and a host of smaller alternatives — has transformed awareness and usage.
NFTs are often traded in cryptocurrencies, which is where some of the debate can be confused and lose context, but in early cases within gaming, consumers earn NFTs through gameplay — or perhaps in future will be able to use 'real' money or a game's virtual currency to make the purchase — with the host platform (like Ubisoft with Quartz) then partnering with Blockchain platforms that operate with cryptocurrencies (we'll come back to Ubisoft's initiative later).
Back to the NFTs. If you buy one, you own a token (like a receipt) for that asset, whether it's artwork, an in-game cosmetic, etc. Part of the debate is whether that ownership actually matters, as the nature of the internet makes it a wild west of image sharing and downloading, so you may own an NFT for an image while millions download an identical JPEG. Nevertheless, there has been a boom in the last 12-24 months of image owners — notably people in pictures that became 'memes' — making huge sales in cryptocurrencies for an NFT token of that image.
To advocates, NFTs give image rights and ownership back to creators, allowing them to make money from their work. There's also the argument that if you own a digital item as an NFT you can then re-sell, trade or give to others, a perspective that we'll come back to in the discussion of NFTs in games.
To critics, it's irrelevant as the item being sold is virtual and arguably unenforceable, making it 'worthless'. The argument can be that it's a cryptocurrency-driven artificial boom / bubble that won't ever truly reach the mainstream. The truth may, unexcitingly, be somewhere in the middle.