What are NFTs used for?

NFTs are used to record ownership of unique items on a blockchain. The best-known use is digital art and collectibles. The same technology is also applied to game items, tickets, memberships and records linked to physical assets, with mixed results so far.

Art and collectibles

An NFT, or non-fungible token, lets an artist sell a digital work as a single item or a limited edition, something that was difficult when any file could be copied without limit. Buyers get a public record that they hold the original token.

Collectibles became the largest category. These are sets of thousands of computer-generated characters, such as CryptoPunks and Bored Ape Yacht Club, which owners often displayed as profile pictures on social media.

Games, tickets and memberships

• Game items. Some games issue weapons, characters or virtual land as NFTs that players hold in their own wallets and can sell outside the game. Many players and studios have resisted the idea, and several blockchain games lost their audiences when token prices fell.
• Tickets. A ticket issued as an NFT can be checked against the blockchain, and the organizer can set rules for resale.
• Memberships. Holding a certain NFT can act as a pass to an online community, an event or a product launch. Some DAOs, which are groups run by token-holder votes, use NFTs to identify members.
• Brand loyalty. Companies have tested NFTs as digital stamps or rewards. Starbucks, for example, ran an NFT-based rewards program from 2022 and closed it in 2024.

Real-world items

NFTs can stand for physical things. A token may be paired with a watch, a bottle of wine or a pair of sneakers held in storage, so that the item can change hands without being shipped.

The token is only as good as the legal arrangement behind it. A blockchain entry does not by itself transfer title to a house or a car. Someone must hold the physical item and honor the claim. The guide to tokenization covers this wider trend.

What happened to the NFT boom?

NFT trading surged in 2021, alongside a broad rise in crypto prices. The market reversed from 2022. Trading volumes dropped steeply as crypto prices fell in that year's bear market, and many collections lost most of their market value.

Critics argue that the boom was driven by speculation, meaning purchases made in the hope of reselling at a higher price, more than by demand for the items themselves. They also point to trades staged to fake demand, plagiarized artwork and abandoned projects, described in the guide to rug pulls. Supporters reply that the less speculative uses, such as tickets and game items, were always going to take longer to develop. Both camps agree that owning an NFT gives no guarantee that anyone will want to buy it later.