Look, I need to be honest with you about NFTs. In March 2021, I watched a cartoon ape JPEG sell for the equivalent of a Manhattan apartment. By late 2022, those same apes lost 90% of their value. The whole thing looked insane from the outside, and honestly, a lot of it was. But here's what an NFT actually is when you strip away the hype: it's a blockchain token proving you own a specific digital item, even though anyone can copy that item perfectly. Think of it like owning the deed to a house versus owning a photo of that house. The photo might look identical, but only the deed gives you actual ownership rights. Whether that distinction matters is the entire debate around NFTs.

So let me give you the straight answer first, then we'll dig into why this technology exists and whether it solves any real problems. An NFT is a non-fungible token, which just means a unique blockchain entry that can't be swapped one-for-one like dollars or Bitcoin. Each NFT represents ownership of something specific, whether that's digital art, a domain name, an event ticket, or a game item. The blockchain permanently records who owns it, creating provable scarcity for things that can otherwise be copied infinitely. That's the core concepteverything else is about whether that matters and how people use (or misuse) it.

The Actual Problem NFTs Solve

Before blockchain, digital items had zero scarcity. You could have a digital file, but so could millions of others with perfect copies. Physical art has the original Mona Lisa. Digital art just had infinite identical copies. This created real problems for creators trying to monetize work and collectors wanting to own something meaningful.

NFTs solve this through cryptographic proof of ownership. The blockchain records who owns the token. I can screenshot a Bored Ape all day, but the blockchain proves I don't own the actual NFT. For Bored Apes specifically, owners get commercial rights to that design, access to exclusive events, potential airdrops, and community membership. The screenshot gives me none of that.

NFTs also enable programmable royalties. When you mint an NFT, you can code it so every resale automatically pays the creator 5-10%. An artist sells work for $500, it resells for $50,000, and they automatically receive $2,500-$5,000. This was impossible with traditional digital distribution where artists got paid once and never saw resale revenue.

How This Actually Works (The Technical Reality)

Let me walk you through Bored Ape Yacht Club as our example. BAYC launched in April 2021 with 10,000 unique cartoon apes using the ERC-721 standard on Ethereum. This is a smart contract template defining how unique tokens work. Each ape gets a unique token ID, and the contract tracks which wallet owns each ape.

Here's where things get messy. When you buy a Bored Ape, you're buying the token on the blockchain. But the actual image isn't stored there because storing large files on Ethereum costs thousands in gas fees. Instead, the token contains a link pointing to where the image lives. For BAYC, images are stored on IPFS, a decentralized storage network. As long as nodes "pin" the file, it persists. If all nodes drop it, the image disappears.

This creates real risk. You own a blockchain token containing a link to an image stored somewhere else. If that storage fails, your expensive NFT becomes a token pointing to nothing. Some early NFT projects from 2017-2019 already have broken links. Projects storing images on regular web servers like AWS are worse. If the company goes bankrupt, those NFTs become 404 errors.

Bored Apes initially sold for 0.08 ETH, around $200 at launch. Floor price peaked around 120 ETH in April 2022, roughly $420,000. As of 2025, floor prices sit around 10-20 ETH. Despite the 80-90% crash, BAYC demonstrated NFTs could build genuine communities. But it also showed how speculative and volatile NFT markets are. Most people who bought near peak lost substantial money.

The Honest Problems You Need to Know

Yes, anyone can screenshot any NFT. Ownership matters for specific contexts: verified social media profiles, token-gated Discord access, commercial usage rights, and resale value. A screenshot grants none of those. But for simply enjoying the art, screenshots work fine. Whether NFT ownership justifies the price is entirely subjective.

The environmental criticism was valid but mostly resolved. Pre-2022, Ethereum NFT transactions consumed massive energy. After Ethereum's Merge to Proof of Stake in September 2022, energy consumption dropped 99.95%. NFT transactions now use negligible energy comparable to sending an email.

NFT markets have rampant wash trading. People sell NFTs to themselves to fake volume and inflate perceived value. Research suggests 40-70% of trading volume in some collections is wash trading. Most NFT value in 2021-2022 was pure speculation. Buy low, hope someone pays higher. This works during manias, collapses during crashes. Floor prices dropped 90%+ for most collections. Countless projects were scams: create hype, sell out the mint, vanish with millions. Influencers secretly bought NFTs, hyped them to followers, sold at peak, and watched prices collapse.

Most buyers don't understand what they own. Buying an NFT grants you the token, resale rights, and maybe commercial rights if stated. You don't own the copyright, can't prevent others from copying the image, and can't reproduce the work without permission.

Are NFTs Dead? The Post-Crash Reality

NFT trading volume crashed 95%+ from 2021 peaks. The speculative bubble popped. But legitimate use cases continue developing. ENS domains provide genuine utility. Event tickets as NFTs prevent counterfeiting. Academic credentials as NFTs create verifiable records. Gaming items owned as NFTs mean players truly own their assets.

NFTs aren't dead, but the "get rich buying JPEGs" era is over. What remains are practical applications where verifiable digital ownership solves real problems. For domain names, credentials, and access control, NFTs provide real utility. For art and collectibles, NFTs face extreme volatility and speculation risks. Most NFT projects will go to zero.

The Pragmatic Take

NFTs demonstrate you can create verifiable ownership and scarcity for digital items. Before blockchain, digital scarcity was impossible. Whether that novelty translates to value depends on what the NFT represents and whether ownership provides utility beyond speculation.

Some applications make sense. ENS domains work because typing "example.eth" beats remembering 42-character wallet addresses. NFT tickets prevent counterfeits and control resales. Game developers giving players true ownership creates better incentives than traditional models where companies own everything and can delete accounts arbitrarily.

Other applications are pure speculation. Buying a cartoon ape for $400,000 hoping to flip it is gambling, not investing. Most people who did this lost substantial money. The technology enabled new forms of speculation, community building, and status signaling, but calling most NFT projects "investments" is dishonest.

NFTs will probably persist as infrastructure for specific applications where digital ownership verification matters. Most people will use the technology without realizing it, like DNS works invisibly behind every website. The speculation and hype are mostly gone, making the technology easier to evaluate rationally.

Will this make you rich? Almost certainly not. Will it solve real problems for specific applications? Probably yes, for domain names, credentials, and digital ownership where provable scarcity matters. Everything else is noise.