An NFT, or non-fungible token, is a unique TokenTokenA digital asset created with a smart contract on another cryptocurrency's blockchain, rather than on a blockchain of its own. on a blockchain. One bitcoin is exactly equal to any other, but every NFT is one of a kind and can't be swapped like for like.
How does an NFT work?
An NFT is recorded in a smart contractSmart contractA program that runs on a blockchain and automatically carries out what it was written to do once certain conditions are met., for example under the ERC-721 standard on Ethereum. The contract records who owns each NFT, and anyone can verify that on the blockchain.
Think of a concert ticket with a seat number. Any two ISK 1,000 notes are interchangeable, but a ticket for seat 12 is not the same as a ticket for seat 40.
NFTs can represent, for example:
- digital art and collectibles
- items in video games
- tickets to events
- domain names, for example on the Ethereum Name Service
What to know
- A token is not a copyright. Owning an NFT doesn't automatically give you the rights to the work. That depends on the terms that come with it.
- The image is often stored elsewhere. The blockchain often holds only a link to the file. If the site hosting it shuts down, the file can disappear.
- The price is uncertain. NFT prices can swing a lot, and it can be hard to find a buyer.
- Scams are common. Most security problems with NFTs come from PhishingPhishingA scam where criminals pretend to be a trusted company or authority to get you to hand over passwords, card details or your seed phrase..
NFTs that are unique and not interchangeable fall outside MiCAMiCAThe EU regulation on markets in crypto-assets, in force in Iceland since 1 January 2026, which sets the same rules for crypto services across the EEA., so the consumer protection MiCA provides doesn't cover them.
Everything in Myntkaup Learn is written and regularly reviewed by the Myntkaup editorial team. It is for education and is not investment advice. Editorial policy. Updated 18 October 2026.