Non-fungible tokens (NFTs) were one of the biggest stories in cryptocurrency in 2021. NFTs are blockchain-based digital items whose units are designed to be unique, unlike traditional cryptocurrencies whose units are meant to be interchangeable. NFTs can store data on blockchains — with most NFT projects built on blockchains like Ethereum and Solana — and that data can be associated with images, videos, audio, physical objects, memberships, and countless other developing use cases. NFTs typically give the holder ownership over the data or media the token is associated with, and are commonly bought and sold on specialized marketplaces.
NFT popularity skyrocketed in 2021. Chainalysis tracked a minimum $44.2 billion worth of cryptocurrency sent to ERC-721 and ERC-1155 contracts — the two types of Ethereum smart contracts associated with NFT marketplaces and collections — up from just $106 million in 2020.