Non-Fungible Tokens (NFTs) are the digital representation of a rare/unique asset (I think digital media is a better definition) registered in the smart contract of a blockchain network. Twe two most common smart contract standards are ERC-20 and ERC-721. The first one is used to mint smart contracts representing cryptocurrency fungible tokens like $ETH (on the Ethereum blockchain). As of January 2022, around 488,032 ERC-20 token contracts are available on the Ethereum blockchain, according to Token Tracker ! The ERC-721 smart contract standard is used to mint Non-Fungible Tokens for different kinds of digital media, including (but not limited to) digital art !

Most people associate NFTs to digital art, like Cryptokitties and so on, and they are not wrong, but ERC-721 smart contract standard may be used to tokenize any kind of digital media in the form of NFTs, not only digital art ! Tweets, in-game itens, real estate, virtual avatars, memes, written work and trading cards may be minted as NFTs too. In fact, concert tickets, travel packages and a wide number of services are being minted as NFTs, they are called “Utility NFTs”. According to Bloomberg, the NFT market surpassed $40 Billion in 2021, I guess most of it must be digital art ! The main NFT marketplaces are Opensea, Niftygateway, Rarible, Solanar, Solsea, Binance NFT, Stassh, Knoworigin, SuperRare and FTX NFTs.

Usually NFT owners don't own a physical item, instead they receive a digital file (a media file) and have full ownership rights of that specific token. The more rare or unique the more expensive the NFT might be. Since a NFT has only one owner at a time, it can be transferred or sold and it can also have royalties programmed in the smart contract in the case of a subsequent sale. Creators can add information to the NFT, that information is called metadata, it can be their digital signature or further NFT details. Metadata can help collectors to recognize the artist’s work and build brand awareness among the digital art community. Because of the token's unique data,  people can easily verify and trace ownership, as well as transfer/sell tokens to new owners. However, just remember the media file is not stored on-chain or inside the ERC-721 smart contract, it is stored off-chain (outside the smart contract), usually in a peer-to-peer file system like IPFS, so only the media file address or content identifier (CID) is stored on-chain in the ERC-721 smart contract. Unfortunately most ERC-721 metadata is public in a number of blockchain networks and the media files address can be accessed, that is why a very large number of NFTs from Ethereum and Solana blockchains representing more than 17TB of data were copied to a pirate-bay style website last november by an australian programmer.

Since privacy is a human right, privacy-preserving smart contracts are highly desirable and few blockchain networks are prepared to offer them, as far as I know they are Zcash, Monero and Secret Network. Earlier this week, the auctions for Tarantino NFTs started. They are NFTs of 7 unique scenes from the Pulp Fiction movie, that will be revealed only to the new owners because they were minted in the privacy-preserving blockchain known as Secret Network that provides private metadata and private ownership by design using the SNIP-721 smart contract standard.

Because the great attention obtained and big market potential, it seems that a good number of advances will be seen this year on NFTs, both in terms of programming and in the number of applications (use cases) that will be given to the ERC-721 and related smart contract standards, all beyond digital art !