Non-fungible tokens (NFTs) are cryptocurrencies that do not possess the property of fungibility.
For example, NFTs can be used to represent digital art: at one point, an extremely popular Ethereum-based blockchain game CryptoKitties associated its tokens with unique images of cartoon cats and allowed users to trade those cats by exchanging the corresponding tokens.
Another prominent example is the tokenization of real-world assets like equity or commodities to make them tradable digitally — in this case, tokens represent unique assets and are thus non-fungible.
More rarely, a token may become non-fungible by losing its fungibility property as a result of known past activity. For example, if a certain amount of Bitcoin — fungible by default — is used to pay for illegal goods or fund illegal activities and the overall network becomes aware of it, that Bitcoin becomes less- or non-fungible, as it is unlikely to be accepted by exchanges and other service providers.
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