An NFT is a non-fungible token, the ownership of which is recorded on a blockchain and which is purchased using a digital wallet. You can think of the blockchain as a digital ledger of transactions that exists online, which ensures that each NFT has only one owner at any given time and keeps a record of the history of a token’s ownership.
A smart contract is computer code that is associated with an NFT and runs on the blockchain. It is self-executing code which is used to create or “mint” the NFT and which controls the function and transfer of the NFT, and information regarding the terms of sale and resale of the NFT between the buyers and sellers, including any resale royalty.
Each NFT is like an original piece of art or a specific instance of a signed series of numbered prints. While you can take a picture or buy a replica of a piece of art, each token has a unique ID and represents a specific instance of the digital work. This uniqueness creates provable scarcity which creates value for the NFT.
Essentially, an NFT is associated with a digital asset and is purchased using a digital currency. These digital assets are most commonly unique items such as digital collectibles like avatars, wearables, skins or digital art, However, NFTs may also provide access to a community or project benefits.